📊 ITW Key Takeaways
Is Illinois Tool Works Inc. (ITW) a Good Investment?
ITW demonstrates exceptional operational efficiency with a 26.3% operating margin and exceptional cash generation (16.9% FCF margin), though net income declined 12.1% YoY which warrants monitoring. The company maintains strong financial leverage with 59.4x interest coverage, providing substantial debt servicing capacity despite a 2.38x debt-to-equity ratio. Revenue growth is modest at 0.9% YoY, but the quality of earnings is evidenced by strong free cash flow generation of $2.7B and high ROA of 19%.
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.
Why Buy Illinois Tool Works Inc. Stock? ITW Key Strengths
- Exceptional operational efficiency with 26.3% operating margin and 19.1% net margin
- Strong free cash flow generation of $2.7B (16.9% of revenue) with minimal capex requirements ($419M)
- Outstanding interest coverage of 59.4x indicating minimal financial distress risk
- High return on assets (19.0%) and return on equity (95.0%) demonstrating capital efficiency
- Substantial cash generation supports dividends and debt reduction despite leverage
- 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
- Net income declined 12.1% YoY despite flat revenue growth, signaling profitability pressure or one-time charges
- Elevated debt-to-equity ratio of 2.38x and long-term debt of $7.7B creates refinancing risk in rising rate environment
- Anemic revenue growth of 0.9% YoY suggests limited organic growth momentum in core business
- Quick ratio of 0.89x below 1.0x indicates potential short-term liquidity constraints if cash flow deteriorates
- 20 Form 4 insider filings require analysis to determine if insiders are buying or selling equity
- 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
- Net income and EPS trajectory to confirm if YoY decline was temporary or trend
- Organic revenue growth rate and segment performance breakdown
- Operating cash flow sustainability and free cash flow conversion ratio
- Debt reduction progress and debt-to-EBITDA ratio improvement
- Capital expenditure trends as percentage of revenue to assess reinvestment levels
- 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 |
|---|---|---|---|
| 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 Rating of BUY from Claude (BUY) and ChatGPT (HOLD) with 82% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are ITW's key strengths?
Claude: Exceptional operational efficiency with 26.3% operating margin and 19.1% net margin. Strong free cash flow generation of $2.7B (16.9% of revenue) with minimal capex requirements ($419M). 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: Net income declined 12.1% YoY despite flat revenue growth, signaling profitability pressure or one-time charges. Elevated debt-to-equity ratio of 2.38x and long-term debt of $7.7B creates refinancing risk in rising rate environment. 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 $16.0B.
Does ITW pay dividends?
Illinois Tool Works Inc. pays dividends, with $1,785.0M 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 $10.49.
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 rating reflects both perspectives for balanced insights.
Is ITW a good stock to buy right now?
Based on our AI fundamental analysis in April 2026, Illinois Tool Works Inc. has a BUY rating with 82% confidence. The AI analysis suggests favorable fundamentals based on SEC filings. This is not investment advice.
Is ITW stock overvalued or undervalued?
Valuation metrics for ITW: ROE of 95.0% (sector avg: 15%), net margin of 19.1% (sector avg: 10%). Higher ROE suggests strong returns relative to peers.
Should I buy ITW stock in 2026?
Our dual AI analysis gives Illinois Tool Works Inc. a combined BUY rating 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 $3.1B, with capital expenditures of $419.0M. FCF margin is 16.9%.
How does ITW compare to other Industrial stocks?
Vs Industrial sector averages: Net margin 19.1% (avg: 10%), ROE 95.0% (avg: 15%), current ratio 1.21 (avg: 1.8).
Is Illinois Tool Works Inc. carrying too much debt?
ITW has a debt-to-equity ratio of 2.38x, which is above the Industrial sector average of 0.7x. However, the current ratio of 1.21 suggests adequate short-term liquidity.
Why is ITW's return on equity (ROE) so high?
Illinois Tool Works Inc. has a return on equity of 95.0%, significantly above the Industrial sector average of 15%. A high ROE indicates the company is efficient at generating profits from shareholder equity. This is supported by a 19.1% net margin.