Illinois Tool Works (ITW)
NYSEIndustrialsSpecialty Industrial MachinerySnapshot 2026-07-08
$271.06-1.17%
Close 2026-07-07 · 1-day change
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Track ITW free→NYSEIndustrialsSpecialty Industrial MachinerySnapshot 2026-07-08
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Track ITW free→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
Continue returning capital to shareholders through share repurchases, targeting approximately $1.5 billion annually.
Stated as a priority in 6 of last 6 quarters. The company consistently repurchased $375 million of shares each quarter from 2024-Q4 through 2026-Q1, totaling approximately $1.5 billion annually as planned. This steady repurchase activity demonstrates management's delivery on its capital return commitment.
Standing thesis, reviewed periodically — not a price target or advice.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.
“During the quarter, the company returned capital to shareholders through the repurchase of $375 million of its own shares.”
“During the quarter, the company repurchased $375 million of its own shares.”
“During the quarter, the company repurchased $375 million of its own shares.”
“During the quarter, the company repurchased $375 million of its own shares.”
“During the quarter, the company repurchased $375 million of its own shares.”
“During the quarter, the company repurchased $375 million of its own shares.”
Breaks if: EPS falls below $11.10 in FY26
Raise full year GAAP EPS guidance to a range of $11.10 to $11.50 per share, representing approximately 7-8% growth at the midpoint.
Stated as a priority in 6 of last 6 quarters. GAAP EPS guidance was raised from $11.00-$11.40 in 2025-Q4 to $11.10-$11.50 in 2026-Q1, representing about 7-8% growth at midpoint. Actual GAAP EPS grew from $10.49 in 2025 to a projected range above $11.10 in 2026, showing management is delivering on EPS growth guidance.
“ITW is raising its full year 2026 GAAP EPS guidance by $0.10 to a range of $11.10 to $11.50 per share.”
“ITW is initiating 2026 guidance including GAAP EPS in the range of $11.00 to $11.40 per share.”
“Narrowing full year GAAP EPS guidance range to $10.40 to $10.50.”
“Raising full year 2025 GAAP EPS guidance by $0.10 to a narrower range of $10.35 to $10.55 per share.”
“Maintaining full year 2025 guidance; ongoing pricing actions offset tariff cost impacts.”
“Initiating 2025 guidance including GAAP EPS in the range of $10.15 to $10.55 per share.”
Breaks if: Free cash flow conversion falls below 90% in FY26
Maintain free cash flow generation at or above 100 percent of net income, supporting capital returns and investments.
Stated as a priority in 6 of last 6 quarters. Free cash flow conversion rates have varied from 59% in 2025-Q2 to above 100% in 2025-Q3 and Q4, with 2026 guidance projecting free cash flow to exceed 100% of net income. The trajectory shows improving free cash flow conversion, with some seasonal variation, consistent with management's stated goal.
“Free cash flow was $528 million, a six percent increase representing a 69 percent conversion of net income, in line with seasonal expectations.”
“Free cash flow was $0.9 billion with a conversion of 109 percent to net income.”
“Free cash flow increased 15 percent to $904 million with a conversion rate of 110 percent to net income.”
“Free cash flow was $449 million with a conversion of 59 percent to net income.”
“Free cash flow was $496 million with a conversion of 71 percent to net income.”
“Record free cash flow of $1 billion, an increase of 10% with a conversion of 133%.”
Breaks if: Operating margin falls below 26.5% in FY26
Breaks if: YoY revenue growth falls below 2% in FY26
Continue to grow total revenue by 2 to 4 percent annually, with organic growth of 1 to 3 percent, driven by all seven segments delivering positive organic growth.
Stated as a priority in 6 of last 6 quarters. Revenue grew from $15.9 billion in 2024 to $16.0 billion in 2025 and $4.02 billion in 2026-Q1, with 2026-Q1 revenue up 4.6% year-over-year. Management consistently projects 2-4% total revenue growth and 1-3% organic growth, indicating delivery on this priority.
“The company continues to project revenue growth of two to four percent and organic growth of one to three percent.”
“The company projects revenue growth of two to four percent and organic growth of one to three percent.”
“The company is projecting overall revenue growth of one to three percent.”
“The company is projecting revenue growth of one to three percent and organic growth of flat to two percent.”
“The Company is projecting revenue and organic growth of zero to two percent.”
“The company is projecting above-market organic growth of zero to two percent based on current levels of demand.”