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Illinois Tool Works (ITW)
NYSE:ITW
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Illinois Tool Works (ITW) AI Stock Analysis

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ITW

Illinois Tool Works

(NYSE:ITW)

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Outperform 72 (OpenAI - 4o)
Rating:72Outperform
Price Target:
$286.00
â–²(11.09% Upside)
Illinois Tool Works' strong earnings performance and profitability are the most significant factors driving its stock score. The company's ability to maintain growth in key segments like automotive and welding, despite a challenging environment, is commendable. However, high leverage and segment-specific challenges pose risks. The stock's valuation and technical indicators suggest a balanced outlook, with moderate growth potential and income appeal.
Positive Factors
Strong Profit Margins
ITW's robust profit margins indicate strong pricing power and operational efficiency, supporting long-term profitability and competitive advantage.
Operational Efficiency
Improved operating margins reflect ITW's effective cost management and operational efficiency, enhancing its ability to sustain profitability in challenging environments.
Dividend Growth
Consistent dividend increases demonstrate ITW's strong cash flow generation and commitment to returning value to shareholders, reinforcing investor confidence.
Negative Factors
High Leverage
High leverage can limit financial flexibility and increase risk, potentially impacting ITW's ability to invest in growth opportunities or weather economic downturns.
Revenue Decline in Key Segments
Declining revenues in key segments like Construction Products can hinder overall growth potential and indicate challenges in maintaining market share.
Decline in Free Cash Flow Growth
A significant decline in free cash flow growth may affect ITW's ability to fund operations, invest in new projects, and return capital to shareholders.

Illinois Tool Works (ITW) vs. SPDR S&P 500 ETF (SPY)

Illinois Tool Works Business Overview & Revenue Model

Company DescriptionIllinois Tool Works Inc. manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The Automotive OEM segment offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks, and other industrial uses. The Food Equipment segment provides warewashing, refrigeration, cooking, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services. The Test & Measurement and Electronics segment produces and sells equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. The Welding segment produces arc welding equipment; and metal arc welding consumables and related accessories. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment offers engineered fastening systems and solutions for the residential construction, renovation/remodel, and commercial construction markets. The Specialty Products segment offers beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. It serves the automotive OEM/tiers, commercial food equipment, construction, general industrial, and automotive aftermarket end markets. The company distributes its products directly to industrial manufacturers, as well as through independent distributors. Illinois Tool Works Inc. was founded in 1912 and is based in Glenview, Illinois.
How the Company Makes MoneyITW generates revenue through a diversified portfolio of products and services across its various segments. The company primarily makes money by selling its manufactured goods, which include industrial equipment, components, and consumables tailored for specific industries. Key revenue streams come from sectors such as automotive, where they supply essential components, and food equipment, where they offer cooking and food processing machines. ITW also benefits from its strong focus on innovation, allowing for premium pricing on specialized products. The company has established significant partnerships with major industries, enhancing its market reach and enabling long-term contracts that provide a steady revenue flow. Additionally, ITW's operational efficiency and cost management strategies contribute to its profitability, as they help maintain healthy margins across its diverse offerings.

Illinois Tool Works Key Performance Indicators (KPIs)

Any
Any
Revenue by Segment
Revenue by Segment
Shows how much each business segment contributes to total sales, indicating diversification and potential growth areas within the company.
Chart InsightsIllinois Tool Works' Automotive OEM segment shows robust growth, bolstered by strong performance in China and an improved operating margin. Despite challenges in North America and Europe, the company raised its full-year guidance, reflecting confidence in its strategic initiatives. The Welding segment also shows positive momentum, while the Construction Products segment faces headwinds. Overall, ITW's focus on pricing actions and innovation supports its goal to outperform end markets, with a promising outlook for the remainder of 2025.
Data provided by:Main Street Data

Illinois Tool Works Earnings Call Summary

Earnings Call Date:Oct 24, 2025
(Q3-2025)
|
Next Earnings Date:Jan 29, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted ITW's ability to deliver strong financial results in a challenging demand environment, with significant successes in its automotive and welding segments. However, the company continues to face challenges in certain segments, such as construction and polymers & fluids, which experienced revenue declines.
Q3-2025 Updates
Positive Updates
Revenue Growth and Strong Financial Performance
ITW reported a 3% increase in revenue for Q3 2025 excluding a 1% reduction due to strategic product line simplification. Organic growth was 1%, with a 2% contribution from favorable foreign currency translation. Operating income grew by 6% to $1.1 billion, and operating margin improved by 90 basis points to 27.4%.
Automotive OEM Segment Success
The automotive OEM segment reported a 7% increase in revenue and 5% organic growth. The segment saw a 240 basis point improvement in operating margin to 21.8%. China experienced a 10% revenue growth, driven by market share gains in the EV market.
Welding Segment Performance
The Welding segment achieved 3% organic growth with equipment sales up 6% and consumables down 2%. The segment's operating margin improved by 30 basis points to 32.6%.
Dividend Increase and Share Repurchases
ITW announced its 62nd consecutive dividend increase, raising it by 7%. The company has repurchased over $1.1 billion of its outstanding shares year-to-date.
Negative Updates
Challenging Demand Environment
Despite a 1% organic growth, the demand environment remained challenging with some segments like Test & Measurement and Electronics experiencing a 1% and 2% decline respectively.
Construction Products Segment Decline
The Construction Products segment saw a 1% revenue decline, with organic revenue down 2%. Despite market headwinds, operating margin improved by 140 basis points to 31.6%.
Polymers & Fluids Segment Revenue Decline
The Polymers & Fluids segment experienced a 2% decline in revenue, with organic revenue down 3%. Polymers declined 5% against a difficult comparison from the previous year.
Company Guidance
In the third quarter of 2025, ITW provided updated guidance for the full year, highlighting a strong operational and financial performance despite a challenging demand environment. The company achieved a 3% increase in revenue, with organic growth at 1%, and favorable foreign currency translation contributing 2%. Notably, ITW's GAAP EPS was $2.81, and operating income grew by 6% to reach $1.1 billion, with a 90 basis point improvement in operating margin to 27.4%. The ITW team effectively managed controllable factors, with enterprise initiatives contributing 140 basis points to operating margins. ITW also announced its 62nd consecutive dividend increase of 7% and repurchased over $1.1 billion in shares year-to-date. Looking ahead, ITW narrowed its EPS guidance range to $10.40-$10.50 for the full year, reflecting confidence in leveraging the company's strong business model and diversified portfolio, despite projecting organic growth towards the lower end of its 0%-2% guidance.

Illinois Tool Works Financial Statement Overview

Summary
Illinois Tool Works exhibits a strong profitability profile with solid margins and efficient cash generation. However, there are risks associated with its high leverage and recent declines in revenue and free cash flow.
Income Statement
Illinois Tool Works demonstrates solid profitability with a Gross Profit Margin of 43.7% and a Net Profit Margin of 21.3% for the TTM (Trailing-Twelve-Months). However, the slight decline in Total Revenue from the previous period indicates a potential challenge in revenue growth, with a negative growth rate of -0.7%. The company maintains a strong EBIT Margin of 26% and an EBITDA Margin of 30.5%, reflecting operational efficiency.
Balance Sheet
The company's Debt-to-Equity Ratio stands at 2.78, indicating a high level of leverage, which poses a financial risk, but is somewhat traditional in the industry. The Return on Equity (ROE) is robust at 104.8%, showcasing effective use of equity to generate profits. The Equity Ratio is relatively low at 22%, suggesting a higher reliance on debt financing compared to equity.
Cash Flow
Free Cash Flow to Net Income Ratio is strong at 0.53, indicating efficient cash generation relative to net income. However, the Free Cash Flow Growth Rate has declined by 37.4% compared to the previous period, highlighting potential challenges in maintaining cash flow levels. The Operating Cash Flow to Net Income Ratio of 0.6 suggests efficient conversion of net income into cash.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue15.79B15.90B16.11B15.93B14.46B12.57B
Gross Profit6.83B6.94B6.68B6.37B5.83B5.04B
EBITDA4.92B5.11B4.48B4.46B3.94B3.34B
Net Income3.37B3.49B2.96B3.03B2.69B2.11B
Balance Sheet
Total Assets16.05B15.07B15.52B15.42B16.08B15.61B
Cash, Cash Equivalents and Short-Term Investments788.00M948.00M1.06B708.00M1.53B2.56B
Total Debt8.94B8.08B8.37B7.95B7.88B8.31B
Total Liabilities12.84B11.75B12.51B12.33B12.45B12.43B
Stockholders Equity3.21B3.32B3.01B3.09B3.63B3.18B
Cash Flow
Free Cash Flow2.72B2.84B3.08B1.94B2.26B2.57B
Operating Cash Flow3.15B3.28B3.54B2.35B2.56B2.81B
Investing Cash Flow-7.00M-144.00M-403.00M-110.00M-984.00M-214.00M
Financing Cash Flow-3.21B-3.19B-2.78B-3.00B-2.56B-2.05B

Illinois Tool Works Technical Analysis

Technical Analysis Sentiment
Positive
Last Price257.44
Price Trends
50DMA
258.51
Negative
100DMA
254.79
Positive
200DMA
250.36
Positive
Market Momentum
MACD
-1.57
Negative
RSI
54.47
Neutral
STOCH
84.27
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ITW, the sentiment is Positive. The current price of 257.44 is above the 20-day moving average (MA) of 253.87, below the 50-day MA of 258.51, and above the 200-day MA of 250.36, indicating a neutral trend. The MACD of -1.57 indicates Negative momentum. The RSI at 54.47 is Neutral, neither overbought nor oversold. The STOCH value of 84.27 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ITW.

Illinois Tool Works Risk Analysis

Illinois Tool Works disclosed 17 risk factors in its most recent earnings report. Illinois Tool Works reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Illinois Tool Works Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$140.38B37.4720.76%1.13%7.66%9.19%
75
Outperform
$93.82B28.2527.42%0.93%-0.40%24.40%
73
Outperform
$73.23B28.6110.86%1.58%4.78%59.68%
72
Outperform
$73.74B22.59109.06%2.37%-1.40%11.65%
72
Outperform
$39.82B41.5528.46%1.47%-8.23%-3.29%
71
Outperform
$54.77B33.098.16%0.69%13.59%6.52%
63
Neutral
$10.79B15.437.44%2.01%2.89%-14.66%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ITW
Illinois Tool Works
257.44
9.45
3.81%
ETN
Eaton
372.40
32.31
9.50%
EMR
Emerson Electric Company
133.19
26.85
25.25%
PH
Parker Hannifin
766.20
150.59
24.46%
ROK
Rockwell Automation
357.16
91.88
34.64%
ROP
Roper Technologies
479.96
-58.72
-10.90%

Illinois Tool Works Corporate Events

Illinois Tool Works Reports Record Q2 2025 Results
Jul 31, 2025

Illinois Tool Works Inc. (ITW) is a global multi-industrial manufacturing leader, operating across seven industry-leading segments to deliver innovative, customer-focused solutions with best-in-class margins and returns. The company is known for its decentralized and entrepreneurial culture, supported by approximately 44,000 employees worldwide.

Illinois Tool Works Shines in Earnings Call
Jul 31, 2025

Illinois Tool Works (ITW) recently held its earnings call, showcasing a robust financial performance despite challenging market conditions. The company reported significant growth in China and improvements in key segments like Automotive OEM and Welding. Despite facing hurdles in North America and Europe, and a softer construction market, ITW’s strategic initiatives and raised guidance suggest a positive outlook.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Oct 24, 2025