Illinois Tool Works (ITW) AI Stock Analysis

• Market Cap: $77.65B
• Dividend Yield: 2.28%
• Average Volume (3M): 909.77K
• Price to Earnings (P/E): 23.0
• Beta (1Y): 0.75
• Revenue Growth: -1.40%
• EPS Growth: 11.65%
• Country: US
• Employees: 44,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 2.58
• Shares Outstanding: 291,500,000
• 10 Day Avg. Volume: 781,657
• 30 Day Avg. Volume: 909,770
• PEG Ratio: 1.06
• Price to Book (P/B): 22.69
• Price to Sales (P/S): 4.73
• P/FCF Ratio: 26.46
• Enterprise Value/Market Cap: 1.04
• Enterprise Value/Revenue: 5.10
• Enterprise Value/Gross Profit: 11.79
• Enterprise Value/Ebitda: 16.39
• 1Y Price Target: $261.22
• Price Target Upside: -0.81% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 9

• Rating: 73 Outperform
• Price Target: $285.00 ▲(8.22% Upside)

The overall score reflects a strong financial performance and positive earnings call sentiment, bolstered by strategic initiatives and growth in key segments. However, high leverage and recent cash flow challenges present risks.

Positive Factors

Innovative Business Model

ITW's business model focuses on innovation and efficiency, enabling it to deliver high-quality solutions and maintain competitive advantages across diverse sectors.

Strong Profit Margins

Strong profit margins indicate effective cost management and pricing power, supporting long-term profitability and financial health.

Automotive OEM Segment Growth

Growth in the Automotive OEM segment, especially in China, highlights ITW's ability to capitalize on market opportunities and drive revenue expansion.

Negative Factors

High Leverage

High leverage poses financial risks, potentially limiting flexibility and increasing vulnerability to economic downturns.

Decline in Revenue Growth

A decline in revenue growth suggests potential challenges in market demand or competitive pressures, impacting future expansion.

Free Cash Flow Challenges

Declining free cash flow growth may hinder ITW's ability to invest in growth initiatives and manage debt, affecting long-term financial stability.

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 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 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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	15.79B	15.90B	16.11B	15.93B	14.46B	12.57B
Gross Profit	6.83B	6.94B	6.68B	6.37B	5.83B	5.04B
EBITDA	4.92B	5.11B	4.48B	4.46B	3.94B	3.34B
Net Income	3.37B	3.49B	2.96B	3.03B	2.69B	2.11B
Balance Sheet
Total Assets	16.05B	15.07B	15.52B	15.42B	16.08B	15.61B
Cash, Cash Equivalents and Short-Term Investments	788.00M	948.00M	1.06B	708.00M	1.53B	2.56B
Total Debt	8.94B	8.08B	8.37B	7.95B	7.88B	8.31B
Total Liabilities	12.84B	11.75B	12.51B	12.33B	12.45B	12.43B
Stockholders Equity	3.21B	3.32B	3.01B	3.09B	3.63B	3.18B
Cash Flow
Free Cash Flow	2.72B	2.84B	3.08B	1.94B	2.26B	2.57B
Operating Cash Flow	3.15B	3.28B	3.54B	2.35B	2.56B	2.81B
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: Neutral
• Last Price: 263.36
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ITW, the sentiment is Neutral. The current price of 263.36 is below the 20-day moving average (MA) of 264.05, above the 50-day MA of 260.57, and above the 200-day MA of 252.61, indicating a neutral trend. The MACD of 1.37 indicates Positive momentum. The RSI at 51.14 is Neutral, neither overbought nor oversold. The STOCH value of 47.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ITW.

Illinois Tool Works Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PH	79 Outperform	$97.50B	28.38	27.42%	0.90%	-0.40%	24.40%
ETN	76 Outperform	$140.18B	36.45	20.76%	1.11%	7.66%	9.19%
EMR	73 Outperform	$77.37B	29.53	10.86%	1.56%	4.78%	59.68%
ROK	73 Outperform	$39.41B	41.13	28.46%	1.52%	-8.23%	-3.29%
ITW	73 Outperform	$77.65B	23.04	109.06%	2.28%	-1.40%	11.65%
ROP	71 Outperform	$55.68B	36.36	8.15%	0.63%	13.59%	6.52%
Sector *	63 Neutral	$10.84B	15.52	7.44%	2.00%	2.86%	-14.57%

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.