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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on ITW

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1.c. Company Highlights

2. ITW's Q3 Earnings: A Strong Performance Amidst a Choppy Demand Environment

ITW's third-quarter revenue increased 3%, with organic growth of 1%, and favorable foreign currency translation contributing 2%. GAAP EPS was $2.81, beating analyst estimates of $2.75, while operating income grew 6% to a record $1.1 billion, and operating margin improved 90 basis points to 27.4%. The company's enterprise initiatives contributed 140 basis points to margin, and pricing and supply chain actions offset tariff costs. The strong performance was driven by various segments, including Automotive OEM, which saw revenue increase 7% with organic growth of 5%.

Publication Date: Oct -27

📋 Highlights
  • Q3 Revenue Growth & Margin Expansion:: Revenue rose 3% (+1% organic growth), GAAP EPS hit $2.81, operating income reached record $1.1B (+6%), and operating margin improved 90 bps to 27.4%.
  • Dividend & Share Repurchase:: 62nd consecutive dividend increase (+7%) and $1.1B in share repurchases year-to-date, reflecting strong capital returns.
  • 2025 Guidance Narrowed:: Full-year EPS guidance tightened to $10.40–$10.50, with organic growth projected at 0–2% and operating margin of 26–27%.
  • Segment Performance:: Automotive OEM revenue jumped 7% (+5% organic), while Welding maintained 32.6% margin, and Test & Measurement margins surged 260 bps sequentially to 25.4%.
  • 2030 Operating Margin Target:: Aiming for 30% operating margin by 2030 via organic growth, CBI (Customer-Backed Innovation), and margin expansion initiatives.

Segment Performance

The company's segments performed well, with Automotive OEM revenue increasing 7%, Food Equipment revenue increasing 3%, and Welding delivering 3% organic growth. Test & Measurement and Electronics revenue was flat, but operating margin improved 260 basis points sequentially to 25.4%. Construction Products revenue declined 1%, but operating margin improved 140 basis points to 31.6%. Specialty Products revenue increased 3%, with organic revenue up 2%, and operating margin improved 120 basis points to 32.3%. The company's focus on customer-backed innovation is driving growth in areas like automotive and construction.

Outlook and Guidance

For the full year 2025, ITW expects organic growth of 0% to 2%, total revenue growth of 1% to 3%, and operating margin of 26% to 27%. GAAP EPS guidance range is narrowed to $10.40 to $10.50. The company remains confident in its ability to outperform end markets and deliver differentiated financial performance. Looking ahead to 2026, the company expects above-market organic growth, continued progress on strategic initiatives, and market share gains.

Valuation and Dividend

With a P/E Ratio of 23.84 and an EV/EBITDA of 17.68, the company's valuation appears reasonable considering its strong financial performance. The company's dividend yield is 2.49%, and it has announced its 62nd consecutive dividend increase, raising the dividend by 7%. The company's strong balance sheet and cash flow generation support its capital deployment plans, including a $1.5 billion buyback plan and potential M&A opportunities.

Tariffs and Pricing

The company feels confident in its ability to offset tariffs through pricing and supply chain actions. The impact on demand was initially significant but is now largely behind them. The company's price/cost was positive in Q3, both dollar-for-dollar and from a margin standpoint, and it feels confident in managing cost increases.

3. NewsRoom

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Illinois Tool Works Inc. $ITW Shares Purchased by American Century Companies Inc.

Dec -03

Source: defenseworld.net

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Illinois Tool Gains From Business Strength Amid Persisting Headwinds

Nov -21

Source:

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Illinois Tool Works Inc. $ITW Shares Purchased by Avantax Advisory Services Inc.

Nov -19

Source: defenseworld.net

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Illinois Tool Works Inc. $ITW Shares Sold by Arcadia Investment Management Corp MI

Nov -15

Source: defenseworld.net

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Head-To-Head Survey: IDEX (NYSE:IEX) & Illinois Tool Works (NYSE:ITW)

Nov -15

Source: defenseworld.net

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Allworth Financial LP Buys 525 Shares of Illinois Tool Works Inc. $ITW

Nov -14

Source: defenseworld.net

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Prediction: After Gaining Just 19% in 5 years, This Dividend King Will Beat the S&P 500 Through 2030

Nov -01

Source: fool.com

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ITW Board of Directors Declares Quarterly Dividend

Oct -29

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.30%)

6. Segments

Automotive OEM

Expected Growth: 3.0%

The automotive industry is experiencing a gradual shift towards electrification, which might slow down the growth. However, the increasing demand for lightweight and high-performance components could offset some of the decline, resulting in a slightly lower growth than the global average.

Test & Measurement and Electronics

Expected Growth: 4.0%

The segment benefits from the ongoing technological advancements and the increasing complexity of electronic devices, driving up the demand for sophisticated testing and measurement equipment, thus exceeding the global average growth.

Food Equipment

Expected Growth: 3.5%

The segment is expected to grow slightly above the global average due to the continuous need for efficient and safe food processing equipment, driven by consumer demand for processed and packaged foods.

Construction Products

Expected Growth: 3.2%

The growth in this segment is closely related to the global construction industry trends. While there might be fluctuations in different regions, the overall growth is expected to be slightly below the global average due to potential regional downturns.

Welding

Expected Growth: 3.1%

The segment's growth is influenced by the overall industrial production and infrastructure investments. The increasing demand for high-quality welding equipment and consumables supports a growth rate close to the global average.

Polymers & Fluids

Expected Growth: 3.4%

The segment benefits from the increasing demand for high-performance polymers and the ongoing advancements in polymer technology, supporting a growth rate slightly above the global average.

Specialty Products

Expected Growth: 3.6%

The diverse nature of this segment allows it to capitalize on growth opportunities across different markets, potentially leading to a growth rate above the global average.

Intersegment

Expected Growth: None%

None

7. Detailed Products

Welding

ITW's welding segment provides equipment, consumables, and accessories for various welding processes, including MIG, TIG, arc, and spot welding.

Food Equipment

ITW's food equipment segment offers commercial food equipment, including ovens, refrigerators, and dishwashers, for the foodservice and food retail industries.

Polymers & Fluids

ITW's polymers and fluids segment provides adhesives, sealants, lubricants, and other specialty chemicals for various industries, including automotive, aerospace, and construction.

Test & Measurement and Electronics

ITW's test and measurement and electronics segment offers equipment and consumables for testing, measurement, and inspection applications, as well as electronic components and assemblies.

Wuhan

ITW's Wuhan segment provides equipment and consumables for the Chinese welding market.

Automotive OEM

ITW's automotive OEM segment provides components and systems for automotive original equipment manufacturers, including fasteners, components, and assemblies.

Automotive Aftermarket

ITW's automotive aftermarket segment offers repair and maintenance products, including brake pads, friction materials, and vehicle accessories.

8. Illinois Tool Works Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Illinois Tool Works Inc. has a diversified product portfolio, which reduces the threat of substitutes. The company's products are highly specialized and customized, making it difficult for substitutes to enter the market.

Bargaining Power Of Customers

The bargaining power of customers is moderate due to the presence of large industrial customers. However, Illinois Tool Works Inc. has a strong brand reputation and a diversified customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's large scale of operations and its ability to negotiate prices with suppliers. Illinois Tool Works Inc. also has a diversified supplier base, which reduces dependence on individual suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the industry. Illinois Tool Works Inc. has a strong brand reputation, a large customer base, and a significant investment in research and development, making it difficult for new entrants to compete.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of established competitors in the industry. Illinois Tool Works Inc. operates in a highly competitive market, and the company needs to continuously innovate and improve its products to maintain its market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 73.54%
Debt Cost 4.24%
Equity Weight 26.46%
Equity Cost 9.59%
WACC 5.65%
Leverage 277.89%

11. Quality Control: Illinois Tool Works Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Cummins

A-Score: 5.9/10

Value: 3.5

Growth: 5.7

Quality: 5.6

Yield: 4.0

Momentum: 8.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
ITW

A-Score: 5.6/10

Value: 1.8

Growth: 5.2

Quality: 6.7

Yield: 5.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
AMETEK

A-Score: 5.4/10

Value: 1.7

Growth: 6.1

Quality: 8.1

Yield: 1.0

Momentum: 6.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Emerson Electric

A-Score: 5.3/10

Value: 2.4

Growth: 3.1

Quality: 6.5

Yield: 4.0

Momentum: 7.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Otis

A-Score: 4.9/10

Value: 4.4

Growth: 4.4

Quality: 5.7

Yield: 3.0

Momentum: 3.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Ingersoll Rand

A-Score: 4.3/10

Value: 1.8

Growth: 7.6

Quality: 6.6

Yield: 0.0

Momentum: 2.5

Volatility: 7.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

249.7$

Current Price

249.7$

Potential

-0.00%

Expected Cash-Flows