📊 ITW Key Takeaways
Is Illinois Tool Works Inc. (ITW) a Good Investment?
Illinois Tool Works demonstrates strong operational fundamentals with 25.4% operating margins and robust ROE of 23.8%, but faces serious growth and profitability headwinds with only 0.9% revenue growth and net income declining 12.1% YoY. High leverage (2.04x Debt/Equity) combined with weak quick ratio (0.86x) and deteriorating earnings trajectory create material downside risk despite solid free cash flow generation.
Illinois Tool Works shows exceptional operating quality, with very high operating and net margins, strong free cash flow generation, and ample interest coverage. However, revenue growth is minimal and earnings are declining, while the extremely high ROE appears heavily influenced by a thin equity base and leverage rather than pure growth strength. The fundamentals support a high-quality, resilient business, but current growth quality looks mixed rather than clearly accelerating.
Illinois Tool Works Inc. Key Strengths (ITW)
- Exceptional operating margin of 25.4% and net margin of 19.1% demonstrate strong competitive positioning and cost control
- Outstanding ROE of 23.8% and ROA of 4.7% indicate efficient capital deployment despite leverage
- Solid free cash flow of $528M (13.1% FCF margin) provides debt service capability and financial flexibility
- Strong interest coverage ratio of 14.4x ensures manageable debt servicing despite high leverage
- Significant insider activity with 19 Form 4 filings in last 90 days suggests management confidence
- Very strong profitability, including a 26.3% operating margin and 19.1% net margin
- Robust cash generation with $2.71B of free cash flow and a 16.9% FCF margin
- Solid financial resilience shown by 59.4x interest coverage and acceptable liquidity
ITW Stock Risks: Illinois Tool Works Inc. Investment Risks
- Stalled growth trajectory with only 0.9% YoY revenue increase indicates business momentum loss
- Net income declined 12.1% YoY despite stable revenue, signaling margin compression or rising operating costs
- High leverage at 2.04x Debt/Equity ratio limits financial flexibility to handle downturns or invest in growth
- Quick ratio of 0.86x below 1.0 threshold raises near-term liquidity concerns
- EPS declining 10.4% YoY suggests deteriorating shareholder value creation despite profitability
- Revenue growth is weak at only 0.9% YoY, suggesting limited top-line momentum
- Net income and diluted EPS both declined materially, indicating earnings pressure
- High leverage and a low equity base inflate ROE and increase balance-sheet sensitivity
Key Metrics to Watch
- Revenue growth acceleration—need evidence of organic growth returning to 3%+ to validate business resilience
- Net income and margin trends—critical to determine if decline is temporary or structural weakness
- Debt reduction pace—leverage must improve materially given growth stall and earnings pressure
- Operating cash flow stability—ensure FCF remains robust as earnings headwinds persist
- Liquidity ratios improvement—quick ratio must move above 1.0 to alleviate solvency concerns
- Organic revenue growth and segment-level operating income trends
- Free cash flow conversion and debt reduction versus shareholder returns
Illinois Tool Works Inc. (ITW) Financial Metrics & Key Ratios
💡 AI Analyst Insight
Illinois Tool Works Inc. presents a mixed fundamental picture. Review the detailed metrics above to form your own investment thesis.
ITW Profit Margin, ROE & Profitability Analysis
ITW vs Industrial Sector: How Illinois Tool Works Inc. Compares
How Illinois Tool Works Inc. compares to Industrial sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Illinois Tool Works Inc. Stock Overvalued? ITW Valuation Analysis 2026
Based on fundamental analysis, Illinois Tool Works Inc. has mixed fundamental signals relative to the Industrial sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Illinois Tool Works Inc. Balance Sheet: ITW Debt, Cash & Liquidity
ITW Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Illinois Tool Works Inc.'s revenue has grown significantly by 11% over the 5-year period, indicating strong business expansion. The most recent EPS of $9.74 reflects profitable operations.
ITW Revenue Growth, EPS Growth & YoY Performance
ITW Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $3.8B | $700.0M | $2.38 |
| Q3 2025 | $4.0B | $821.0M | $2.81 |
| Q2 2025 | $4.0B | $755.0M | $2.54 |
| Q1 2025 | $3.8B | $700.0M | $2.38 |
| Q3 2024 | $4.0B | $772.0M | $2.55 |
| Q2 2024 | $4.0B | $754.0M | $2.48 |
| Q1 2024 | $4.0B | $714.0M | $2.33 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Illinois Tool Works Inc. Dividends, Buybacks & Capital Allocation
ITW SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Illinois Tool Works Inc. (CIK: 0000049826)
📋 Recent SEC Filings
❓ Frequently Asked Questions about ITW
What is the AI rating for ITW?
Illinois Tool Works Inc. (ITW) has a Combined AI Grade of C from Claude (C) and ChatGPT (B) with 78% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are ITW's key strengths?
Claude: Exceptional operating margin of 25.4% and net margin of 19.1% demonstrate strong competitive positioning and cost control. Outstanding ROE of 23.8% and ROA of 4.7% indicate efficient capital deployment despite leverage. ChatGPT: Very strong profitability, including a 26.3% operating margin and 19.1% net margin. Robust cash generation with $2.71B of free cash flow and a 16.9% FCF margin.
What are the risks of investing in ITW?
Claude: Stalled growth trajectory with only 0.9% YoY revenue increase indicates business momentum loss. Net income declined 12.1% YoY despite stable revenue, signaling margin compression or rising operating costs. ChatGPT: Revenue growth is weak at only 0.9% YoY, suggesting limited top-line momentum. Net income and diluted EPS both declined materially, indicating earnings pressure.
What is ITW's revenue and growth?
Illinois Tool Works Inc. reported revenue of $4.0B.
Does ITW pay dividends?
Illinois Tool Works Inc. pays dividends, with $465.0M distributed to shareholders in the trailing twelve months.
Where can I find ITW SEC filings?
Official SEC filings for Illinois Tool Works Inc. (CIK: 0000049826) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is ITW's EPS?
Illinois Tool Works Inc. has a diluted EPS of $2.66.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined grade reflects both perspectives for balanced insights.
What is ITW's fundamental grade?
Based on our AI fundamental analysis in June 2026, Illinois Tool Works Inc. has a C grade with 78% confidence. Review the strengths and risks sections above for full context. This is not investment advice.
Is ITW stock overvalued or undervalued?
Valuation metrics for ITW: ROE of 23.8% (sector avg: 15%), net margin of 19.1% (sector avg: 10%). Higher ROE suggests strong returns relative to peers.
What is ITW's AI grade for 2026?
Our dual AI analysis gives Illinois Tool Works Inc. a combined C grade for 2026. Revenue is data pending, with profitability above sector average. Always conduct your own research.
What is ITW's free cash flow?
Illinois Tool Works Inc.'s operating cash flow is $623.0M, with capital expenditures of $95.0M. FCF margin is 13.1%.
How does ITW compare to other Industrial stocks?
Vs Industrial sector averages: Net margin 19.1% (avg: 10%), ROE 23.8% (avg: 15%), current ratio 1.19 (avg: 1.8).
Is Illinois Tool Works Inc. carrying too much debt?
ITW has a debt-to-equity ratio of 2.04x, which is above the Industrial sector average of 0.7x. However, the current ratio of 1.19 suggests adequate short-term liquidity.