Illinois Tool Works (ITW)
NYSE:ITW
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Illinois Tool Works
(NYSE:ITW)
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Rating:72Outperform
Price Target:
$287.00
â–²(6.49% Upside)
Action:ReiteratedDate:02/16/26
The score is driven primarily by strong underlying profitability/cash generation and supportive 2026 guidance for margin expansion and EPS growth. Offsetting factors are elevated leverage, a technically overextended setup (high RSI/Stoch despite a strong uptrend), and a relatively rich P/E multiple with only moderate dividend support.
Positive Factors
Cash generation
Consistently strong free cash flow conversion (Q4 at 109% and guidance >100%) provides durable internal funding for dividends, share repurchases and high-return projects. Reliable cash conversion improves resilience in downturns and underpins long-term capital allocation flexibility.
Negative Factors
Elevated leverage
High leverage (debt-to-equity ~2.2x–2.8x) constrains financial flexibility and raises refinancing and interest-rate exposure. While returns are strong, part of ROE is leverage-amplified; elevated debt reduces capacity for countercyclical investment or aggressive inorganic opportunities in stress periods.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation
Consistently strong free cash flow conversion (Q4 at 109% and guidance >100%) provides durable internal funding for dividends, share repurchases and high-return projects. Reliable cash conversion improves resilience in downturns and underpins long-term capital allocation flexibility.
Read all positive factors
Illinois Tool Works (ITW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$77.67B
Dividend Yield2.43%
Average Volume (3M)1.28M
Price to Earnings (P/E)23.5
Beta (1Y)0.69
Revenue Growth-0.41%
EPS Growth-10.88%
CountryUS
Employees44,000
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)2.72
Shares Outstanding288,200,000
10 Day Avg. Volume1,054,357
30 Day Avg. Volume1,284,292
Financial Highlights & Ratios
PEG Ratio-2.24
Price to Book (P/B)22.32
Price to Sales (P/S)4.49
P/FCF Ratio26.59
Enterprise Value/Market Cap1.10
Enterprise Value/Revenue5.35
Enterprise Value/Gross Profit12.16
Enterprise Value/Ebitda18.44
Forecast
1Y Price Target
$275.25Price Target Upside2.13% Upside
Rating ConsensusHold
Number of Analyst Covering9
EPS Forecast (FY)11.23
Revenue Forecast (FY)$16.56B
Illinois Tool Works Business Overview & Revenue Model
Company Description
Illinois 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;...
How the Company Makes Money
ITW primarily makes money by selling engineered industrial products and equipment to business customers (B2B) across its operating segments. Revenue is generated through (1) product sales of equipment and components—such as welding machines, comme...
Illinois Tool Works Key Performance Indicators (KPIs)
Any
Revenue by Segment
Shows how much each business segment contributes to total sales, indicating diversification and potential growth areas within the company.
Shows how much each business segment contributes to total sales, indicating diversification and potential growth areas within the company.
Data provided by:
The Fly
The FlyIllinois Tool Works Earnings Call Summary
Earnings Call Date:Feb 03, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The call conveyed a fundamentally positive tone: management reported solid Q4 results with revenue growth, record margins, strong cash generation, meaningful progress on strategic innovation (CBI), and constructive 2026 guidance (moderate organic growth, EPS growth, margin expansion). Challenges were acknowledged — regional softness in Europe, construction/residential weakness, cyclical exposure in semiconductors, some inflationary and employee-cost offsets, and a selective M&A backdrop — but these were framed as manageable. On balance, the operational execution, margin expansion from enterprise initiatives, and CBI momentum outweigh the cited headwinds.Positive Updates
Quarterly Revenue and EPS Beat
Q4 total revenue growth of 4.1% (organic +1.3%, FX +2.5%, acquisitions +0.3%) with GAAP EPS of $2.72, up 7% year-over-year.
Negative Updates
Regional Weakness in Europe
Europe declined ~2% in Q4 and several segments reported Europe down (e.g., Construction Products -5% international, Food Equipment international +2% but Europe softness noted), indicating ongoing European demand softness.
Read all updates
Q4-2025 Updates
Positive
Negative
Quarterly Revenue and EPS Beat
Q4 total revenue growth of 4.1% (organic +1.3%, FX +2.5%, acquisitions +0.3%) with GAAP EPS of $2.72, up 7% year-over-year.
Read all positive updates
Company Guidance
Illinois Tool Works guided 2026 to total revenue growth of 2%–4% and organic growth of 1%–3% (based on current demand and seasonality), with operating margin expanding about 100 basis points to 26.5%–27.5% (including ~100 bps from enterprise initiatives), GAAP EPS of $11.00–$11.20 (midpoint $11.20, ~7% growth), and high‑quality incremental margins in the mid‑to‑high‑40s; management expects a 47/53 H1/H2 EPS split (Q1 ≈23% of full‑year EPS), free cash flow conversion to net income >100%, ~ $1.5B of share buybacks, all seven segments to outgrow end markets and improve margins, and continued CBI momentum (2.4% contribution in 2025) on the path to 3%+ by 2030.Illinois Tool Works Financial Statement Overview
Summary
Income Statement
82
Very Positive
Balance Sheet
58
Neutral
Cash Flow
78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 16.04B | 15.90B | 16.11B | 15.93B | 14.46B |
| Gross Profit | 7.08B | 6.94B | 6.68B | 6.37B | 5.83B |
| EBITDA | 4.65B | 5.11B | 4.48B | 4.46B | 3.94B |
| Net Income | 3.07B | 3.49B | 2.96B | 3.03B | 2.69B |
Balance Sheet | |||||
| Total Assets | 16.15B | 15.07B | 15.52B | 15.42B | 16.08B |
| Cash, Cash Equivalents and Short-Term Investments | 851.00M | 948.00M | 1.06B | 708.00M | 1.53B |
| Total Debt | 8.97B | 8.08B | 8.37B | 7.95B | 7.88B |
| Total Liabilities | 12.92B | 11.75B | 12.51B | 12.33B | 12.45B |
| Stockholders Equity | 3.23B | 3.32B | 3.01B | 3.09B | 3.63B |
Cash Flow | |||||
| Free Cash Flow | 2.71B | 2.84B | 3.08B | 1.94B | 2.26B |
| Operating Cash Flow | 3.13B | 3.28B | 3.54B | 2.35B | 2.56B |
| Investing Cash Flow | -521.00M | -144.00M | -403.00M | -110.00M | -984.00M |
| Financing Cash Flow | -2.74B | -3.19B | -2.78B | -3.00B | -2.56B |
Illinois Tool Works Technical Analysis
Negative
269.51
Price Trends
274.36
Negative
261.34
Negative
256.59
Positive
Market Momentum
-4.62
Negative
40.24
Neutral
29.76
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ITW, the sentiment is Negative. The current price of 269.51 is above the 20-day moving average (MA) of 261.77, below the 50-day MA of 274.36, and above the 200-day MA of 256.59, indicating a neutral trend. The MACD of -4.62 indicates Negative momentum. The RSI at 40.24 is Neutral, neither overbought nor oversold. The STOCH value of 29.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $121.93B | 32.82 | 25.65% | 0.79% | 0.22% | 26.66% | |
76 Outperform | $149.60B | 30.24 | 21.67% | 1.29% | 8.24% | 6.21% | |
72 Outperform | $77.67B | 23.48 | 95.18% | 2.43% | -0.41% | -10.88% | |
71 Outperform | $36.63B | 31.06 | 7.81% | 0.73% | 13.95% | 6.80% | |
69 Neutral | $80.22B | 30.81 | 11.60% | 1.58% | 2.97% | 18.14% | |
68 Neutral | $43.82B | 35.94 | 27.69% | 1.33% | 0.98% | -7.51% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
ITW
Illinois Tool Works
269.51
40.44
17.65%
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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.