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Illinois Tool Works (ITW)
:ITW

Illinois Tool Works (ITW) AI Stock Analysis

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Illinois Tool Works

(NYSE:ITW)

74Outperform
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.
Positive Factors
European Market
European economic recovery would be a relative tailwind to ITW sales and earnings.
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.
Negative Factors
Auto Sector Challenges
Autos will pose a challenge in the rest of 2025 and beyond.
Demand Concerns
Signs of soft demand raise concerns about the company's future growth prospects.
Earnings and Growth
ITW has struggled to deliver organic growth and earnings growth in line with peers.

Illinois Tool Works (ITW) vs. S&P 500 (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 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
Any
Revenue by Segment
Revenue by Segment
Shows revenue distribution across different business segments, highlighting which areas drive growth and profitability, and indicating diversification or concentration risks.
Chart InsightsIllinois Tool Works' Automotive OEM segment shows resilience with growth in China, driven by EV market gains, despite a slight revenue dip in recent quarters. The Food Equipment segment maintains steady growth, supported by institutional demand. However, Construction Products and Test & Measurement face headwinds, with organic growth challenges and revenue declines. The company is effectively managing tariffs and maintaining strong margins, but overall organic growth remains a concern. Strategic pricing and supply chain actions are expected to neutralize tariff impacts by year-end, potentially stabilizing earnings.
Data provided by:Main Street Data

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. 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.
Balance Sheet
78
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
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
15.90B16.11B15.93B14.46B12.57B
Gross Profit
7.04B6.79B6.50B5.97B5.20B
EBIT
4.26B4.04B3.79B3.48B2.88B
EBITDA
5.11B4.48B4.24B3.91B3.32B
Net Income Common Stockholders
3.49B2.96B3.03B2.69B2.11B
Balance SheetCash, Cash Equivalents and Short-Term Investments
948.00M1.06B708.00M1.53B2.56B
Total Assets
15.07B15.52B15.42B16.08B15.61B
Total Debt
8.08B8.37B7.76B7.69B8.12B
Net Debt
7.13B7.30B7.05B6.16B5.56B
Total Liabilities
11.75B12.51B12.33B12.45B12.43B
Stockholders Equity
3.32B3.01B3.09B3.63B3.18B
Cash FlowFree Cash Flow
2.84B3.08B1.94B2.26B2.57B
Operating Cash Flow
3.28B3.54B2.35B2.56B2.81B
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

Technical Analysis Sentiment
Neutral
Last Price242.32
Price Trends
50DMA
246.58
Negative
100DMA
251.80
Negative
200DMA
252.04
Negative
Market Momentum
MACD
-1.00
Negative
RSI
52.88
Neutral
STOCH
79.65
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 242.32 is above the 20-day moving average (MA) of 233.54, below the 50-day MA of 246.58, and below the 200-day MA of 252.04, indicating a neutral trend. The MACD of -1.00 indicates Negative momentum. The RSI at 52.88 is Neutral, neither overbought nor oversold. The STOCH value of 79.65 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
HWHWM
79
Outperform
$62.19B50.2428.29%0.20%10.01%47.87%
PHPH
76
Outperform
$79.71B23.8327.16%1.05%-0.23%22.41%
ROROP
75
Outperform
$60.86B40.838.09%0.56%13.34%1.98%
ITITW
74
Outperform
$71.00B21.33107.62%2.43%-1.85%12.04%
EMEMR
70
Outperform
$61.08B25.769.66%1.94%10.29%22.72%
ROROK
67
Neutral
$28.68B31.5626.22%2.02%-11.28%-23.69%
64
Neutral
$4.27B11.815.31%249.66%4.08%-8.61%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ITW
Illinois Tool Works
242.32
2.86
1.19%
EMR
Emerson Electric Company
108.32
3.97
3.80%
PH
Parker Hannifin
619.02
73.95
13.57%
ROK
Rockwell Automation
253.65
-18.65
-6.85%
ROP
Roper Technologies
566.04
53.46
10.43%
HWM
Howmet Aerospace
154.07
74.13
92.73%

Illinois Tool Works Earnings Call Summary

Earnings Call Date:Jan 29, 2026
(Q1-2025)
|
% Change Since: 0.24%|
Next Earnings Date:May 05, 2026
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.
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.