Illinois Tool Works (ITW)
NYSEIndustrialsIndustrial - MachinerySnapshot 2026-09-04
$270.12-0.56%
Close 2026-09-04 · 1-day change
NYSEIndustrialsIndustrial - MachinerySnapshot 2026-09-04
Intact: The reason to own it still holds.
Illinois Tool Works grows revenue about 2-4% yearly. Profit margins stay strong near 27%. The company returns about $1.5 billion annually to shareholders by buying back stock. Free cash flow is expected to exceed net income, supporting investments and buybacks.
Revenue growth may slow below 2% amid sector headwinds. Profit margins could compress below 26.5%. Free cash flow generation is uneven, risking capital returns. Guidance cuts and a fragile quality rating raise concerns about execution.
The stock trades about 12% above our fair value near $243, reflecting consensus 4% revenue growth. Our fair value is 8% below the Street median, indicating some valuation risk. We see modest upside if ITW meets its growth and margin targets.
Breaks if: Annual share repurchases fall below $1 billion
Breaks if: EPS falls below $11.10 in FY26
Breaks if: Free cash flow conversion falls below 90% in FY26
This is not a price target or investment advice.
A long-form read on the 1–3 year hold thesis. It updates when the weekly evidence changes.
This investment represents a durable compounder with a focus on steady revenue and earnings growth. The current thesis state is intact, supported by recent financial performance and management's clear priorities for growth.
The market appears to have priced in a low level of fragility, suggesting that execution quality is a concern but not overly punitive. Valuation is considered cheap compared to peers, with a slight expectations gap indicating some room for improvement.
Management is on track to achieve its revenue growth and earnings per share goals for 2026, with recent results showing positive trends. However, there is a moderate risk due to the potential for sector headwinds, which could impact future performance.
The thesis hinges on the performance of sector bellwethers like GEV, PH, and TT. If these companies continue to exceed earnings expectations, it could provide a favorable backdrop for ITW. Conversely, any negative guidance from these peers could pose a risk to ITW's momentum.
The most important moves since the prior daily snapshot.
Yes, our read has strengthened. The latest earnings beat supports the thesis. ITW raised its GAAP EPS guidance to $11.35 to $11.55 for 2026. The company forecasts organic growth of 3% to 4% in 2026.
as of 2026-09-04
Review the evidence to watch, what would become a concern, and what would make it less concerning.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.
Breaks if: Operating margin falls below 26.5% in FY26
Breaks if: YoY revenue growth falls below 2% in FY26
Overall, the multi-year view for ITW is cautiously optimistic, contingent on sector performance and management execution. Not investment advice.