Illinois Tool Works (ITW) AI Stock Analysis

• Market Cap: $74.62B
• Dividend Yield: 2.36%
• Average Volume (3M): 855.59K
• Price to Earnings (P/E): 22.4
• Beta (1Y): 0.78
• Revenue Growth: -1.85%
• EPS Growth: 12.04%
• Country: US
• Employees: 44,000
• Sector: Industrials
• Sector Strength: 89
• Industry: Industrial - Machinery
• EPS (TTM): 2.38
• Shares Outstanding: 293,000,000
• 10 Day Avg. Volume: 1,033,869
• 30 Day Avg. Volume: 855,585
• PEG Ratio: -6.85
• Price to Book (P/B): 21.80
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 24.77
• Enterprise Value/Market Cap: 1.04
• Enterprise Value/Revenue: 1.22
• Enterprise Value/Gross Profit: 11.35
• Enterprise Value/Ebitda: 3.95
• 1Y Price Target: $246.13
• Price Target Upside: -4.56% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 9

• Rating: 77 Outperform
• Price Target: $279.00 ▲(8.18%Upside)

Illinois Tool Works earns a solid score of 77, driven primarily by its strong financial performance and effective management of operating margins. The recent earnings call highlighted strengths in specific geographic regions and segments, though challenges in organic growth and certain market conditions temper the outlook. The technical analysis suggests stability, while the valuation remains fair with a reasonable P/E ratio and attractive dividend yield.

Positive Factors

Manufacturing Strategy

ITW's tariff resilience is supported by its manufacturing strategy to 'produce where we sell'.

Margin Performance

ITW’s margin performance has been very consistent, delivering 46% incremental margins since 2016.

Tariff Impact

The company highlighted minimal tariff impact for Auto OEM, which was a positive surprise.

Negative Factors

Demand Weakness

Industry data support broad demand weakness across the portfolio.

Growth Challenges

The company will face headwinds to growth and margin expansion given its exposure to automotive and consumer markets, driving negative consensus revisions.

Organic Growth

ITW has struggled to deliver organic growth and earnings growth in line with peers.

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; 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 Money

ITW makes money by manufacturing and selling a wide range of products and solutions across its diverse business segments. The company's revenue model is primarily based on the sale of specialized industrial equipment and consumables, which are used in various industries. Key revenue streams include the Automotive OEM segment, which provides components and fasteners for automotive manufacturers, and the Food Equipment segment, which produces cooking, refrigeration, and food processing equipment. ITW also earns significant revenue from its Test & Measurement and Electronics segment, offering testing equipment and electronics assembly solutions. The strength of ITW's business model lies in its decentralized structure, allowing its business units to operate independently and responsively in their respective markets. Additionally, ITW benefits from a strong focus on customer-driven innovation and a disciplined approach to operational efficiency, which contribute to consistent profitability and growth.

Illinois Tool Works Financial Statement Overview

Summary

Illinois Tool Works demonstrates robust financial health with strong profitability margins and effective cash flow management, albeit with a slight decline in revenue and free cash flow in the latest period. The balance sheet shows moderate leverage, reflecting potential for improved equity positioning.

Income Statement

Illinois Tool Works shows a strong gross profit margin of approximately 43.5% for TTM, indicating efficiency in production. The net profit margin is robust at 21.4% for TTM, reflecting effective cost management. However, the slight revenue decline in TTM compared to 2024 suggests a need for growth strategies. EBIT and EBITDA margins remain healthy, supporting profitability.

Balance Sheet

The company's balance sheet reflects a moderate debt-to-equity ratio of 2.55 for TTM, indicating manageable but notable leverage. With a return on equity of 103.9% for TTM, ITW exhibits strong profitability relative to shareholder investment. The equity ratio of 23.1% suggests the company maintains a balanced asset structure, but there's room for improvement in equity levels.

Cash Flow

ITW delivers a solid free cash flow, though the free cash flow declined by 17.4% in TTM, compared to 2024. The operating cash flow to net income ratio of 0.8 for TTM indicates efficient cash operations, while the free cash flow to net income ratio of 0.7 highlights strong cash generation relative to earnings.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	15.76B	15.90B	16.11B	15.93B	14.46B	12.57B
Gross Profit	6.87B	7.04B	6.79B	6.50B	5.97B	5.20B
EBITDA	4.91B	5.11B	4.48B	4.24B	3.91B	3.32B
Net Income	3.37B	3.49B	2.96B	3.03B	2.69B	2.11B
Balance Sheet
Total Assets	15.47B	15.07B	15.52B	15.42B	16.08B	15.61B
Cash, Cash Equivalents and Short-Term Investments	873.00M	948.00M	1.06B	708.00M	1.53B	2.56B
Total Debt	8.26B	8.08B	8.37B	7.76B	7.69B	8.12B
Total Liabilities	12.23B	11.75B	12.51B	12.33B	12.45B	12.43B
Stockholders Equity	3.24B	3.32B	3.01B	3.09B	3.63B	3.18B
Cash Flow
Free Cash Flow	2.85B	2.84B	3.08B	1.94B	2.26B	2.57B
Operating Cash Flow	3.28B	3.28B	3.54B	2.35B	2.56B	2.81B
Investing Cash Flow	-84.00M	-144.00M	-403.00M	-110.00M	-984.00M	-214.00M
Financing Cash Flow	-3.25B	-3.19B	-2.78B	-3.00B	-2.56B	-2.05B

Illinois Tool Works Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 257.90
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 257.9 is above the 20-day moving average (MA) of 246.88, above the 50-day MA of 244.58, and above the 200-day MA of 251.79, indicating a bullish trend. The MACD of 3.48 indicates Negative momentum. The RSI at 66.76 is Neutral, neither overbought nor oversold. The STOCH value of 85.64 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ITW.

Illinois Tool Works Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HWM	80 Outperform	$72.76B	58.77	28.29%	0.22%	10.01%	47.87%
PH	77 Outperform	$90.29B	27.20	27.16%	1.02%	-0.23%	22.41%
ITW	77 Outperform	$74.62B	22.42	107.62%	2.36%	-1.85%	12.04%
ROP	77 Outperform	$60.85B	40.82	8.09%	0.58%	13.34%	1.98%
EMR	76 Outperform	$77.85B	33.03	9.82%	1.52%	6.49%	24.14%
ROK	69 Neutral	$38.20B	42.67	25.86%	1.55%	-11.19%	-22.50%
Sector *	65 Neutral	$10.75B	15.65	5.18%	1.92%	3.09%	-27.41%

Illinois Tool Works Corporate Events

Illinois Tool Works Elects Directors at Annual Meeting

On May 2, 2025, Illinois Tool Works Inc. held its annual stockholders meeting, where all twelve director nominees were elected. Additionally, the advisory vote on executive compensation was approved, and Deloitte & Touche LLP was ratified as the independent registered public accounting firm for 2025. However, a stockholder proposal for requiring ratification of executive termination pay was defeated.