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Illinois Tool Works (ITW)
NYSE:ITW
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Illinois Tool Works
(NYSE:ITW)
74Outperform
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 and Margin 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 and Segment Profit
End-market data suggests growth unlikely to accelerate, with organic growth and segment profit likely to fall short of Street expectations.
Illinois Tool Works (ITW) vs. S&P 500 (SPY)
Market Cap
$70.28B
Dividend Yield2.46%
Average Volume (3M)1.38M
Price to Earnings (P/E)21.2
Beta (1Y)0.79
Revenue Growth-1.85%
EPS Growth12.04%
CountryUS
Employees44,000
SectorIndustrials
Sector Strength77
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)2.38
Shares Outstanding293,000,000
10 Day Avg. Volume1,508,294
30 Day Avg. Volume1,381,784
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.14
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit11.42
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$247.00Price Target Upside1.61% Upside
Rating ConsensusHold
Number of Analyst Covering13
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 MoneyIllinois Tool Works generates revenue through the design, manufacture, and sale of a diverse range of industrial products and equipment. The company's revenue model is built around its seven business segments, each contributing to the overall financial performance. Key revenue streams include the sale of specialized automotive components, commercial food equipment, testing and measurement devices, welding products, and construction materials. ITW's decentralized business model, which emphasizes customer-driven innovation and operational efficiency, allows it to maintain strong margins. Strategic acquisitions and partnerships further enhance its product offerings and market reach, contributing to sustained revenue growth.
Illinois Tool Works Key Performance Indicators (KPIs)
Any
Revenue by Segment
Shows revenue distribution across different business segments, highlighting which areas drive growth and profitability, and indicating diversification or concentration risks.
Shows revenue distribution across different business segments, highlighting which areas drive growth and profitability, and indicating diversification or concentration risks.
Data provided by:
Main Street Data
Main Street DataIllinois 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. Overall, ITW is well-positioned in the industrial machinery sector with a focus on sustaining growth and profitability.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.85
Very Positive
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.78
Positive
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.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 15.90B | 16.11B | 15.93B | 14.46B | 12.57B | Gross Profit |
| 7.04B | 6.79B | 6.50B | 5.97B | 5.20B | EBIT |
| 4.26B | 4.04B | 3.79B | 3.48B | 2.88B | EBITDA |
| 5.11B | 4.48B | 4.24B | 3.91B | 3.32B | Net Income Common Stockholders |
| 3.49B | 2.96B | 3.03B | 2.69B | 2.11B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 948.00M | 1.06B | 708.00M | 1.53B | 2.56B | Total Assets |
| 15.07B | 15.52B | 15.42B | 16.08B | 15.61B | Total Debt |
| 8.08B | 8.37B | 7.76B | 7.69B | 8.12B | Net Debt |
| 7.13B | 7.30B | 7.05B | 6.16B | 5.56B | Total Liabilities |
| 11.75B | 12.51B | 12.33B | 12.45B | 12.43B | Stockholders Equity |
| 3.32B | 3.01B | 3.09B | 3.63B | 3.18B |
| Cash Flow | Free Cash Flow | |||
| 2.84B | 3.08B | 1.94B | 2.26B | 2.57B | Operating Cash Flow |
| 3.28B | 3.54B | 2.35B | 2.56B | 2.81B | Investing Cash Flow |
| -144.00M | -403.00M | -110.00M | -984.00M | -214.00M | Financing Cash Flow |
| -3.19B | -2.78B | -3.00B | -2.56B | -2.05B |
Illinois Tool Works Technical Analysis
Neutral
243.09
Price Trends
244.96
Negative
250.63
Negative
251.99
Negative
Market Momentum
-0.12
Negative
53.92
Neutral
77.25
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 243.09 is above the 20-day moving average (MA) of 236.72, below the 50-day MA of 244.96, and below the 200-day MA of 251.99, indicating a neutral trend. The MACD of -0.12 indicates Negative momentum. The RSI at 53.92 is Neutral, neither overbought nor oversold. The STOCH value of 77.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $62.89B | 50.32 | 28.29% | 0.20% | 10.01% | 47.87% | |
78 Outperform | $60.86B | 40.83 | 8.09% | 0.55% | 13.34% | 1.98% | |
76 Outperform | $61.08B | 25.76 | 9.82% | 1.92% | 6.49% | 24.14% | |
76 Outperform | $79.71B | 23.83 | 27.16% | 1.05% | -0.23% | 22.41% | |
74 Outperform | $70.28B | 21.20 | 107.62% | 2.46% | -1.85% | 12.04% | |
69 Neutral | $28.61B | 31.59 | 25.86% | 1.81% | -11.19% | -22.50% | |
64 Neutral | $4.25B | 11.69 | 5.23% | 249.83% | 4.04% | -9.46% |
* Industrials Sector Average
Performance Comparison
ITW
Illinois Tool Works
243.09
-0.81
-0.33%
EMR
Emerson Electric Company
112.38
-1.15
-1.01%
PH
Parker Hannifin
641.50
85.00
15.27%
ROK
Rockwell Automation
291.24
25.71
9.68%
ROP
Roper Technologies
574.98
54.66
10.51%
HWM
Howmet Aerospace
157.50
75.66
92.45%
Illinois Tool Works Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: 0.55%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive and negative aspects. While there were strong performances in certain segments and geographies, particularly in Asia Pacific and China, other segments such as Construction Products and Test & Measurement faced challenges. The company's ability to manage tariffs through pricing actions and maintain strong margins despite revenue declines is a positive sign. However, the overall decline in organic growth and the tough market conditions in certain segments balance the sentiment.Q1-2025 Updates
Positive Updates
Solid Operating Margins
Enterprise initiatives contributed 120 basis points to operating margins of 24.8%, indicating strong operational efficiency.
GAAP EPS Exceeds Expectations
GAAP EPS of $2.38 came in ahead of planned expectations, driven by a lower effective tax rate.
Strong Growth in Asia Pacific and China
Organic revenue in Asia Pacific was up 7%, with China up 12%, driven by strong performance in the automotive OEM business.
Food Equipment Segment Growth
Food Equipment organic growth was up more than 1% and up 3% on an equal days’ basis, with strength in institutional end markets.
Automotive OEM Market Share Gains
Automotive OEM segment in China grew 14%, driven by gains in the rapidly growing EV market.
Improved Operating Margin in Polymers & Fluids
Polymers & Fluids organic revenue grew 2%, with operating margin improving 70 basis points to 26.5%.
Negative Updates
Decline in Organic Growth
Overall organic growth was down 1.6%, with total revenue down 3.4% due to foreign currency translation and product line simplification.
Challenges in Construction Products
Construction Products organic growth was down 7% due to tough end-markets, with North America down 10%.
Test & Measurement and Electronics Decline
Organic revenue in Test & Measurement and Electronics was down 5% due to tough comparisons, with the MTS business down 19%.
Welding Market Weakness
Welding organic growth was essentially flat, with North America down 2% and the Commercial side down 6%.
Company Guidance
In the first quarter of 2025, ITW reported flat organic growth on an equal days’ basis amidst a steady demand environment, with operating margins reaching 24.8%, bolstered by enterprise initiatives contributing 120 basis points. The company achieved a GAAP EPS of $2.38, surpassing expectations. ITW maintained its full-year EPS guidance of $10.15 to $10.55, opting not to incorporate the upside from favorable Q1 results and foreign exchange rates. Key metrics included a free cash flow of $496 million with a 71% conversion rate, and a notable 3.4% decline in total revenue due to a 1.8% impact from foreign currency translation. Regionally, organic revenue saw a 3% decline in North America and Europe, while Asia Pacific experienced a 7% increase, driven by a 12% growth in China, particularly in the automotive OEM sector. The company remains focused on mitigating tariff impacts through strategic pricing and supply chain actions, projecting these efforts to be EPS neutral or better by year-end.Illinois Tool Works Corporate Events
Executive/Board ChangesShareholder Meetings
Illinois Tool Works Elects Directors at Annual Meeting
Neutral
May 7, 2025
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.
Spark’s Take on ITW Stock
According to Spark, TipRanks’ AI Analyst, ITW is a Outperform.
Illinois Tool Works scores a solid 74, driven by strong financial performance and a reasonable valuation, despite some technical weaknesses and mixed earnings call sentiments. The company’s robust profitability, effective cash management, and strategic initiatives in the Asia Pacific region are significant strengths. However, challenges in certain segments and cautious technical indicators temper the overall outlook.
To see Spark’s full report on ITW stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.