Illinois Tool Works (ITW)
Industrials · $81.9B market cap · SEC CIK 0000049826
ahead of 68% of the S&P 500 · #23 of 79 in Industrials
Next reports on Feb 1, 2027, after the close, with analysts expecting $3.02 in earnings per share.
52-week range $238.82 to $303.16. 5% below its 52-week high and 21% above its low.
The case for ITW
- Generated $2.7B of free cash flow in FY2025, 17% of revenue.
- Earns 103% on shareholder equity, a figure flattered by a small equity base.
- Pays a modest 2.3% dividend.
The case against
- Priced at 23× book value. Very little hard asset backing here.
- Growth is weak (42/100): revenue +4.8%, EPS +8.8%, +5.0% a year over five years.
- Long-term debt of $6.7B against $851M of cash.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Industrials companies (momentum is judged against fixed thresholds only), and the five are blended by weight. The score is where that blend places it in the S&P 500. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings and cash, against the growth you get | 40 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 42 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 84 |
| Momentumhow the price has behaved lately | 63 |
| Stabilityhow violently it moves, what it owes and what it pays you | 81 |
- Each factor except momentum is half fixed thresholds, half rank among the 79 Industrials companies.
The financials
Revenue growth
Is the business growing? Slowly
| Last 12 months | +4.8% |
|---|---|
| Over 5 years | +5.0% a year |
| FY2025 revenue | $16.0B (+1%) |
Free cash flow
Is it generating real cash? Yes, plenty
| FY2025 free cash flow | $2.7B |
|---|---|
| Of revenue | 17% |
| Of profit | 88% |
Profit margins
Is profitability improving? No, slipping
| Gross margin | 44% |
|---|---|
| Operating margin | 27% |
| Net margin, FY24 → FY25 → now | 21.9% → 19.1% → 19.4% |
Debt vs. cash
Is the balance sheet healthy? Yes, the debt is manageable
| Cash | $851M |
|---|---|
| Long-term debt | $6.7B |
| Net debt | $5.8B |
| Years to repay | 2.1 yrs |
Valuation
Is the stock price reasonable? A bit pricey
| P/E | 25.4× |
|---|---|
| Fair P/E for its growth | 21× |
| P/FCF | 30.3× |
| Forward P/E | 22.9× |
| EV / EBITDA | 20.4× |
At 25.4× earnings it trades close to the 21× that 6% a year of growth plus a 2.3% dividend would justify. At 30.3× free cash flow it trades above that same mark.
The financials, five years deep
Pulled from Illinois Tool Works's XBRL filings on SEC EDGAR. Italic rows are worked out from the others.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Revenue growth | |||||
| Revenue | $16.0B | $15.9B | $16.1B | $15.9B | $14.5B |
| Change on the year | +1% | −1% | +1% | +10% | — |
| Free cash flow | |||||
| Free cash flow | $2.7B | $2.8B | $3.1B | $1.9B | $2.3B |
| Of revenue | 17% | 18% | 19% | 12% | 16% |
| Profit margins | |||||
| Operating margin | 26.3% | 26.8% | 25.1% | 23.8% | 24.1% |
| Net margin | 19.1% | 21.9% | 18.4% | 19.0% | 18.6% |
| Debt vs. cash | |||||
| Cash | $851M | $948M | $1.1B | $708M | $1.5B |
| Long-term debt | $6.7B | $6.3B | $6.3B | $6.2B | $6.9B |
| Net cash (debt) | −$5.8B | −$5.4B | −$5.3B | −$5.5B | −$5.4B |
What Illinois Tool Works says it does
Illinois Tool Works Inc. (the "Company" or "ITW") was founded in 1912 and incorporated in 1915. The Company's ticker symbol is ITW. The Company is a global manufacturer of a diversified range of industrial products and equipment with 88 divisions in 49 countries. As of December 31, 2025, the Company employed approximately 43,000 people. The Company's operations are organized and managed based on similar product offerings and end markets, and are reported to senior management as the following seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The following is a description of the Company's seven segments: Automotive OEM — This segment is a global, niche supplier to top tier OEMs, providing unique innovation to address pain points for sophisticated customers with complex problems. Businesses in this segment produce components and…
Risk factors ITW lists in its 10-K
- The Company's results are impacted by global economic conditions. Downturns in the markets served by the Company could adversely affect its businesses, results of operations or financial condition
- The global nature of the Company's operations subjects it to political, economic and social risks that could adversely affect its business, results of operations or financial condition
- A significant fluctuation between the U.S. Dollar and other currencies could adversely impact the Company's operating income
- The benefits from the Company's enterprise strategy may not be as expected and the Company's financial results could be adversely impacted, or the Company may not meet its long-term financial performance targets
- The timing and amount of the Company's share repurchases are subject to a number of uncertainties
- If the Company is unable to successfully introduce new products, its future growth may be adversely affected
- If the Company is unable to adequately protect its intellectual property, its competitive position and results of operations may be adversely impacted
- The Company has significant goodwill and other intangible assets, and future impairment of these assets could have a material adverse impact on the Company's financial results
- Raw material price increases and supply shortages could adversely affect results
- The Company's defined benefit pension plans are subject to financial market risks that could adversely affect its results of operations and cash flows
- The Company's acquisition of businesses could negatively impact its profitability and returns
- Divestitures pose the risk of retained liabilities that could adversely affect the Company's financial results
- Unfavorable tax law changes and tax authority rulings may adversely affect results
- Adverse outcomes in legal proceedings or enforcement actions may adversely affect results
- Uncertainty related to environmental regulation and industry standards, as well as physical risks of climate change, could impact the Company's results of operations and financial position