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ITW Stock Analysis: Hold (Score 56.5/100) | Blank Capital Research | Blank Capital Research
ITW
ILLINOIS TOOL WORKS INC
$270.52
-2.66 (-0.97%)
Score56.5
Data as of Apr 6, 2026
ITW
ILLINOIS TOOL WORKS INC
IndustrialsMachinery
$270.52
-2.66 (-0.97%)
Open $273.81High $274.66Low $270.31Prev $273.18Vol ---52W: $214.66 – $303.16
Hold
Composite score
01234567890123456789.0123456789
Global rank
#584
Percentile
Top 13%
Business quality
85th
percentile
Exceptional capital efficiency and structural profitability. This enterprise generates superior returns on invested capital compared to industry peers.
Relative valuation derived from Industrials sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 85.1GRADE A
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
92.5%
Sector: 8.9%
Dividend Analysis audit
INCOME
2.34%
Trailing Yield
$2.34
Per $100 Invested
Solid dividend yield for income-focused strategies.
Est. Payout Ratio
59%SAFE
Analyst Projections
Analyst Consensus
Unlock Valuation Tools
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Based on our 6-factor quantitative model, ILLINOIS TOOL WORKS INC (ITW) receives a "Hold" rating with a composite score of 56.5/100, ranked #584 out of 4446 stocks. Key factor scores: Quality 85/100, Value 42/100, Momentum 48/100. This is quantitative analysis only — not investment advice.
ILLINOIS TOOL WORKS INC (ITW) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does ILLINOIS TOOL WORKS INC Do?
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. ILLINOIS TOOL WORKS INC (ITW) is classified as a large-cap stock in the Industrials sector, specifically within the Machinery industry. The company is led by CEO Ernest S. Santi and employs approximately 46,000 people, headquartered in Wilmington, Illinois. With a market capitalization of $75.1B, ITW is one of the prominent companies in the Industrials sector.
ILLINOIS TOOL WORKS INC (ITW) Stock Rating — Hold (April 2026)
As of April 2026, ILLINOIS TOOL WORKS INC receives a Hold rating with a composite score of 56.5/100 and 3 out of 5 stars from the Blank Capital Research quantitative model.ITW ranks #584 out of 4,446 stocks in our coverage universe. Within the Industrials sector, ILLINOIS TOOL WORKS INC ranks #99 of 752 stocks, placing it in the top quartile of its Industrials peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
ITW Stock Price and 52-Week Range
ILLINOIS TOOL WORKS INC (ITW) currently trades at $270.52. The stock lost $2.66 (1.0%) in the most recent trading session. The 52-week high for ITW is $303.15, which means the stock is currently trading -10.8% from its annual peak. The 52-week low is $214.66, putting the stock 26.0% above its annual trough. Recent trading volume was 982K shares, suggesting relatively thin trading activity.
Is ITW Overvalued or Undervalued? — Valuation Analysis
ILLINOIS TOOL WORKS INC (ITW) carries a value factor score of 42/100 in the Blank Capital model, indicating fair valuation relative to historical norms. The trailing price-to-earnings ratio is 25.32x, compared to the Industrials sector average of 28.33x — a discount of 11%. The price-to-book ratio stands at 23.41x, versus the sector average of 2.23x. The price-to-sales ratio is 4.84x, compared to 0.50x for the average Industrials stock. On an enterprise value basis, ITW trades at 19.51x EV/EBITDA, versus 5.70x for the sector.
Overall, ITW's valuation appears roughly in line with sector benchmarks, suggesting the market is pricing the stock fairly given its current fundamentals and growth trajectory. Neither deep value nor significantly overpriced, the stock occupies a middle ground on valuation.
ILLINOIS TOOL WORKS INC Profitability — ROE, Margins, and Quality Score
ILLINOIS TOOL WORKS INC (ITW) earns a quality factor score of 85/100, reflecting elite profitability and capital efficiency that places it among the highest-quality businesses in the market. The return on equity (ROE) is 92.5%, compared to the Industrials sector average of 8.9%, which demonstrates strong shareholder value creation. Return on assets (ROA) comes in at 20.3% versus the sector average of 3.3%.
On a margin basis, ILLINOIS TOOL WORKS INC reports gross margins of 50.7%, compared to 35.8% for the sector. The operating margin is 26.3% (sector: 6.2%). Net profit margin stands at 19.1%, versus 3.9% for the average Industrials stock. Revenue growth is running at 3.2% on a trailing basis, compared to 6.4% for the sector. These metrics collectively paint a picture of a highly profitable business with durable competitive advantages.
ITW Debt, Balance Sheet, and Financial Health
ILLINOIS TOOL WORKS INC has a debt-to-equity ratio of 237.0%, compared to the Industrials sector average of 70.0%. This elevated leverage warrants close monitoring, as it increases the company's sensitivity to rising interest rates and economic downturns. Total debt on the balance sheet is $7.86B. Cash and equivalents stand at $948M.
ITW has a beta of 0.77, meaning it is less volatile than the S&P 500, making it a relatively defensive holding. The stability factor score for ILLINOIS TOOL WORKS INC is 87/100, indicating low-volatility characteristics and consistent price behavior that appeals to risk-averse investors.
ILLINOIS TOOL WORKS INC Revenue and Earnings History — Quarterly Trend
In TTM 2026, ILLINOIS TOOL WORKS INC reported revenue of $16.04B and earnings per share (EPS) of $11.75. Net income for the quarter was $3.07B. Gross margin was 50.7%. Operating income came in at $3.13B.
In FY 2024, ILLINOIS TOOL WORKS INC reported revenue of N/A and earnings per share (EPS) of $11.75. Operating income came in at $4.26B.
In Q4 2025, ILLINOIS TOOL WORKS INC reported revenue of $4.09B. Net income for the quarter was $790M. Gross margin was 44.2%.
In FY 2025, ILLINOIS TOOL WORKS INC reported revenue of $16.04B and earnings per share (EPS) of $10.52. Net income for the quarter was $3.07B. Gross margin was 52.9%. Operating income came in at $4.22B.
Over the past 8 quarters, ILLINOIS TOOL WORKS INC has demonstrated a growth trajectory, with revenue expanding from $4.05B to $16.04B. Investors analyzing ITW stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
ITW Dividend Yield and Income Analysis
ILLINOIS TOOL WORKS INC (ITW) currently pays a dividend yield of 2.3%. At this yield, a $10,000 investment in ITW stock would generate approximately $$234.00 in annual dividend income. With a net margin of 19.1%, the dividend appears well-covered by earnings, suggesting sustainable payouts going forward.
ITW Momentum and Technical Analysis Profile
ILLINOIS TOOL WORKS INC (ITW) has a momentum factor score of 48/100, reflecting neutral trend characteristics. The stock is neither significantly outperforming nor underperforming the broader market on a momentum basis. The investment factor score is 32/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 7/100 signals elevated short interest, which can indicate bearish sentiment among institutional investors.
ITW vs Competitors — Industrials Sector Ranking and Peer Comparison
Comparing ITW against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full ITW vs S&P 500 (SPY) comparison to assess how ILLINOIS TOOL WORKS INC stacks up against the broader market across all factor dimensions.
ITW Next Earnings Date
No upcoming earnings date has been announced for ILLINOIS TOOL WORKS INC (ITW) at this time. Check the earnings calendar for the latest scheduling updates across all stocks in our coverage universe.
Should You Buy ITW? — Investment Thesis Summary
ILLINOIS TOOL WORKS INC presents a balanced picture with arguments on both sides. The quality score of 85/100 indicates above-average profitability and business fundamentals. Low volatility (stability score 87/100) reduces downside risk.
In summary, ILLINOIS TOOL WORKS INC (ITW) earns a Hold rating with a composite score of 56.5/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on ITW stock.
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Institutional Research Dossier
ILLINOIS TOOL WORKS INC (ITW) Deep Dive Analysis
Published on March 24, 2026
Action RatingHold
Sections
Executive Summary
We maintain a Hold rating on Illinois Tool Works (ITW). The company's decentralized business model and strong operational execution have historically driven impressive profitability and returns, as evidenced by its superior margins and ROE compared to the industrial sector. However, the current valuation appears stretched, reflecting the market's recognition of ITW's quality, while growth prospects are likely to moderate given the already high levels of efficiency and market penetration. Therefore, while ITW remains a well-managed and financially sound company, the current risk/reward profile does not warrant an upgrade.
The primary takeaway is that ITW's premium valuation leaves limited room for error. While the company's self-help initiatives and strong market positions provide a degree of downside protection, any significant economic slowdown or operational missteps could lead to multiple compression and underperformance. Investors should closely monitor ITW's organic growth, margin trends, and capital allocation decisions to assess whether the current valuation is justified.
Business Strategy & Overview
Illinois Tool Works operates under a highly decentralized business model, comprised of seven distinct segments: Automotive OEM, Food Equipment, Test & Measurement and Electronics, Welding, Polymers & Fluids, Construction Products, and Specialty Products. This decentralized structure empowers individual business units to operate with a high degree of autonomy, fostering innovation and responsiveness to local market conditions. The company's 80/20 business philosophy, which focuses on serving the 20% of customers that generate 80% of revenue, allows ITW to prioritize its resources and build deep relationships with its key accounts.
ITW's strategic focus centers on organic growth, margin expansion, and disciplined capital allocation. The company aims to achieve organic growth through new product development, geographic expansion, and market share gains. Margin expansion is driven by the company's enterprise initiatives, which include strategic sourcing, operational excellence, and product line simplification. ITW's capital allocation strategy prioritizes reinvesting in the business, funding strategic acquisitions, and returning capital to shareholders through dividends and share repurchases.
The company's diverse product portfolio serves a wide range of end markets, including automotive, food service, construction, and general industrial. This diversification helps to mitigate the impact of cyclical downturns in any one particular market. ITW's products are typically highly engineered and customized to meet the specific needs of its customers, creating a degree of differentiation and pricing power.
Within the Automotive OEM segment, ITW focuses on providing plastic and metal components, fasteners, and assemblies for automobiles and light trucks. The Food Equipment segment offers a comprehensive suite of warewashing, refrigeration, cooking, and food processing equipment. The Test & Measurement and Electronics segment produces equipment and consumables for testing and measuring materials and structures, as well as equipment used in the production of electronic subassemblies. The Welding segment provides arc welding equipment and consumables. The Polymers & Fluids segment produces adhesives, sealants, and lubrication fluids. The Construction Products segment offers engineered fastening systems. Finally, the Specialty Products segment provides beverage packaging equipment and consumables, product coding and marking equipment, and appliance components and fasteners.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
3.2%
Sector: 6.4%
-50% VS SCTR
Economic Moat Analysis
Illinois Tool Works possesses a narrow economic moat, primarily derived from its differentiated products and customer relationships. While not insurmountable, these advantages provide ITW with a degree of pricing power and customer loyalty, allowing it to generate consistently high returns on invested capital. The company's decentralized structure and 80/20 business philosophy contribute to its ability to develop customized solutions for its key customers, fostering stickiness and reducing the likelihood of switching to competitors.
The company's intangible assets, including its brand reputation and proprietary technologies, also contribute to its moat. ITW has a long history of innovation and product development, which has allowed it to establish leading positions in many of its served markets. The company's focus on serving the 20% of customers that generate 80% of revenue allows it to build deep relationships with its key accounts, further strengthening its competitive advantage.
However, ITW's moat is not without its limitations. The company operates in a highly competitive environment, and its products are often subject to commoditization. While ITW's differentiated products and customer relationships provide a degree of protection, they are not immune to competitive pressures. The company's decentralized structure, while beneficial in many respects, can also lead to inefficiencies and a lack of coordination across business units.
Furthermore, the company's reliance on acquisitions for growth can be a double-edged sword. While acquisitions can provide ITW with access to new markets and technologies, they can also be dilutive to earnings and increase the company's leverage. The company's ability to successfully integrate acquisitions is critical to its long-term success.
While ITW's moat is not as wide as some of its peers, it is sufficient to provide the company with a sustainable competitive advantage. The company's differentiated products, customer relationships, and intangible assets allow it to generate consistently high returns on invested capital, making it an attractive investment for long-term investors.
Financial Health & Profitability
Illinois Tool Works exhibits strong financial health, characterized by robust profitability, solid revenue growth, and efficient cash flow generation. The company's gross margin of 50.7% and operating margin of 26.3% significantly exceed the sector averages of 35.8% and 6.2%, respectively, demonstrating its superior operational efficiency and pricing power. The net margin of 19.1% also surpasses the sector average of 3.7%, further highlighting ITW's profitability.
The company's return on equity (ROE) of 92.5% is exceptionally high, indicating its ability to generate substantial profits from shareholders' equity. This figure dwarfs the sector average of 9.2%, showcasing ITW's efficient capital allocation and strong earnings power. While the company's revenue growth of 3.2% is slightly below the sector average of 6.6%, this is likely due to its already large size and mature market positions.
ITW's balance sheet reflects a moderate level of leverage, with a total debt of $7.86 billion and a debt-to-equity ratio of 237.00, which is significantly higher than the sector average of 70.00. However, the company's strong cash flow generation provides ample coverage for its debt obligations. The company's free cash flow of $2.12 billion demonstrates its ability to generate cash from its operations, which can be used to fund investments, acquisitions, and shareholder returns.
Analyzing the quarterly financial history, we observe revenue fluctuations, with Q4 FY2025 revenue at $4.09B and Q3 FY2025 revenue at $4.06B. Net income also varies, with Q3 FY2024 showing a notably higher net income of $1.16B compared to other quarters. The free cash flow exhibits volatility, with Q4 FY2025 showing a negative value of $-298.94M, while other quarters show positive values. Gross margins have remained relatively stable, hovering around 52-53% in recent quarters, except for Q3 FY2024, which had a lower gross margin of 43.8%. Operating margins have also been consistent, generally above 24%.
Overall, ITW's financial health is robust, supported by strong profitability, efficient cash flow generation, and a solid balance sheet. While the company's leverage is somewhat elevated, its strong cash flow provides ample coverage for its debt obligations. The quarterly financial history reveals some fluctuations in revenue, net income, and free cash flow, but the company's overall financial performance remains strong.
Valuation Assessment
Illinois Tool Works' valuation appears stretched relative to its growth prospects and the broader industrial sector. The company's P/E ratio of 21.9x is lower than the sector average of 27.7x, but this comparison is misleading given ITW's superior profitability and quality. A more relevant comparison is to other high-quality industrial companies, where ITW's P/E ratio is generally in line with or slightly above its peers.
The company's EV/EBITDA multiple of 18.7x is significantly higher than the sector average of 5.7x, reflecting the market's recognition of ITW's strong profitability and cash flow generation. This premium valuation suggests that investors are already pricing in ITW's future growth potential and its ability to maintain its high margins. However, it also leaves limited room for error, as any significant slowdown in growth or margin compression could lead to multiple compression and underperformance.
The company's free cash flow yield, calculated using the TTM free cash flow of $2.12 billion and the market cap of $74.26 billion, is approximately 2.9%. This yield is relatively low compared to other industrial companies, suggesting that ITW is not particularly cheap on a cash flow basis. However, it is important to note that ITW's free cash flow is likely to grow over time, as the company continues to invest in its business and improve its operational efficiency.
Given ITW's strong financial performance and its leading positions in its served markets, a premium valuation is warranted. However, the current valuation appears to be at the upper end of its historical range, suggesting that the stock is fairly valued at best. Investors should closely monitor ITW's organic growth, margin trends, and capital allocation decisions to assess whether the current valuation is justified.
The BCR proprietary quant model assigns a Value score of 42/100, further supporting the assessment that ITW is not undervalued. The market appears to be fully pricing in ITW's quality and growth potential, leaving limited upside for investors at the current price.
Risk & Uncertainty
Several risks and uncertainties could impact Illinois Tool Works' future performance. A significant economic slowdown could negatively affect demand for the company's products, particularly in cyclical end markets such as automotive and construction. A decline in industrial production or consumer spending could lead to lower revenue and earnings, potentially impacting the company's ability to meet its financial targets.
Increased competition in ITW's served markets could also pose a threat to its profitability. The company operates in a highly competitive environment, and its products are often subject to commoditization. New entrants or aggressive pricing strategies from existing competitors could erode ITW's market share and pricing power, leading to lower margins.
Fluctuations in raw material prices could also impact ITW's profitability. The company uses a variety of raw materials in its manufacturing processes, including steel, aluminum, and plastics. Significant increases in the prices of these materials could squeeze ITW's margins, particularly if the company is unable to pass these costs on to its customers.
The company's reliance on acquisitions for growth also presents a risk. While acquisitions can provide ITW with access to new markets and technologies, they can also be dilutive to earnings and increase the company's leverage. The company's ability to successfully integrate acquisitions is critical to its long-term success. Failure to properly integrate acquired businesses could lead to lower revenue, higher costs, and a decline in profitability.
Finally, changes in government regulations could also impact ITW's business. The company is subject to a variety of regulations related to environmental protection, product safety, and labor practices. Changes in these regulations could increase ITW's compliance costs and potentially limit its ability to operate in certain markets.
Bulls Say / Bears Say
The Bull Case
BULL VIEWITW's decentralized business model and 80/20 philosophy drive superior operational efficiency and allow for rapid adaptation to changing market conditions, leading to consistent outperformance.
BULL VIEWThe company's strong free cash flow generation and disciplined capital allocation enable it to invest in organic growth initiatives, fund strategic acquisitions, and return capital to shareholders, creating long-term value.
BULL VIEWITW's diverse product portfolio and exposure to a wide range of end markets provide resilience against economic downturns and allow it to capitalize on growth opportunities in various sectors.
The Bear Case
BEAR VIEWITW's premium valuation leaves limited room for error, and any significant economic slowdown or operational missteps could lead to multiple compression and underperformance.
BEAR VIEWThe company's high debt-to-equity ratio increases its financial risk and could limit its ability to invest in growth opportunities or weather economic downturns.
BEAR VIEWITW's reliance on acquisitions for growth creates integration risks and could lead to dilutive earnings or a decline in profitability if acquisitions are not properly managed.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score ITW and 4,400+ other equities.
ILLINOIS TOOL WORKS INC exhibits a 512% valuation premium relative to institutional benchmarks. This represents a potential valuation overextension based on current multiples.
Return on Assets
Efficiency of asset utilization
20.3%
Sector: 3.3%
Gross Margin
Pricing power and cost efficiency
50.7%
Sector: 35.8%
Operating Margin
Core business profitability
26.3%
Sector: 6.2%
Net Margin
Bottom-line profitability
19.1%
Sector: 3.9%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
Sector Avg Yield0.00%
Yield Delta—
Income Projection audit
A $10,000 investment would generate approximately $234 annually in dividends at the current trailing rate.
