ITW

Industrials

Illinois Tool Works

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Market Data

Financials

XBRL · SEC EDGAR

2007–2025(19yr)

Revenue

Net Income

Free CF

Metric	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$16.1B	$17.1B	$13.9B	$15.9B	$17.8B	$17.9B	$14.1B	$14.5B	$13.4B	$13.6B	$14.3B	$14.8B	$14.1B	$12.6B	$14.5B	$15.9B	$16.1B	$15.9B	$16.0B	+0.9%
Gross Profit	$5.7B	$5.9B	$4.7B	$5.6B	$6.3B	$6.5B	$5.6B	$5.8B	$5.5B	$5.7B	$6.0B	$6.2B	$5.9B	$5.2B	$6.0B	$7.8B	$8.2B	$8.3B	$8.5B	+2.3%
Gross Margin	35.3%	34.6%	34.1%	35.5%	35.2%	36.1%	39.5%	40.1%	41.2%	41.9%	42.0%	41.7%	42.0%	41.3%	41.3%	48.9%	50.7%	52.2%	52.9%	+0.7pp
Operating Income	$2.6B	$2.5B	$1.4B	$2.4B	$2.7B	$2.8B	$2.5B	$2.9B	$2.9B	$3.1B	$3.5B	$3.6B	$3.4B	$2.9B	$3.5B	$3.8B	$4.0B	$4.3B	$4.2B	-1.1%
Operating Margin	16.3%	14.6%	10.0%	14.8%	15.4%	15.9%	17.8%	19.9%	21.4%	22.5%	24.4%	24.3%	24.1%	22.9%	24.1%	23.8%	25.1%	26.8%	26.3%	-0.5pp
Net Income	$1.9B	$1.5B	$947.0M	$1.5B	$2.1B	$2.9B	$1.7B	$2.9B	$1.9B	$2.0B	$1.7B	$2.6B	$2.5B	$2.1B	$2.7B	$3.0B	$3.0B	$3.5B	$3.1B	-12.1%
Net Margin	11.6%	8.9%	6.8%	9.6%	11.6%	16.0%	11.9%	20.3%	14.2%	15.0%	11.8%	17.4%	17.9%	16.8%	18.6%	19.0%	18.4%	21.9%	19.1%	-2.8pp
Free Cash Flow	$2.1B	$1.9B	$1.9B	$1.3B	$1.6B	$1.7B	$2.2B	$1.3B	$2.0B	$2.0B	$2.1B	$2.4B	$2.7B	$2.6B	$2.3B	$1.9B	$3.1B	$2.8B	$2.7B	-4.8%
FCF Margin	13.2%	10.9%	13.7%	8.0%	9.0%	9.4%	15.3%	8.7%	15.0%	14.9%	14.7%	16.6%	18.9%	20.4%	15.6%	12.2%	19.1%	17.9%	16.9%	-1.0pp
EPS (Diluted)	$3.36	$2.91	$1.89	$3.03	$4.19	$6.06	$3.74	$7.28	$5.13	$5.70	$4.86	$7.60	$7.74	$6.63	$8.51	$9.77	$9.74	$11.71	$10.49	-10.4%

Total Debt$7.7B

Cash & Equiv.$851.0M

Net Debt$6.8B

4 min read

1. THE BIG PICTURE

Illinois Tool Works has effectively traded market-share dominance for operational purity. By applying its "80/20" philosophy across 88 decentralized divisions, Illinois Tool Works has engineered a portfolio that produces the highest margins in its peer group while accepting some of the slowest revenue growth. It is less a traditional manufacturer and more a specialized high-margin processor that sheds low-value business to protect its bottom line.

2. WHERE THE RISKS HIT HARDEST

The "80/20 Front-to-Back" process, cited as a core competitive advantage for driving margin expansion (10-K Item 1), is simultaneously a primary risk to top-line performance. Management acknowledges that simplifying the customer base and product lines to improve profitability can negatively impact organic revenue growth in the short term (Risks). This tension is evident in the data: while Illinois Tool Works leads its peers with a 52.8% gross margin, its trailing twelve-month revenue growth of 0.9% ranks near the bottom of its peer group (XBRL).

Furthermore, the "Global Footprint" that serves as a strength for the Automotive OEM segment (10-K Item 1) creates a massive currency flank. Because more than 50% of net sales originate outside the U.S., particularly in Europe, Illinois Tool Works’s reported operating income is highly sensitive to a strengthening U.S. Dollar (Risks). Any gains made through operational efficiency can be quickly erased by exchange rate fluctuations beyond management's control.

3. WHAT THE NUMBERS SAY TOGETHER

The financial data reveals a company that has reached a plateau of operational excellence. Illinois Tool Works maintains a 26.3% operating margin—the highest among its peers—and converts 16.5% of its revenue into free cash flow (XBRL). However, the 0.9% TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth suggests that the "Customer-back Innovation" strategy is currently acting more as a defensive tool to maintain pricing power than an offensive tool to capture new markets.

There is a slight divergence in the growth trajectory: the most recent quarter showed 4.1% revenue growth (8-K), significantly higher than the 0.9% TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter figure. This suggests a potential mean-reversion toward management’s 2026 organic growth guidance of 1% to 3%. Short interest stands at 3.1% of the float with 5.5 days to cover (Yahoo Finance), indicating a modest but notable level of skepticism regarding Illinois Tool Works's ability to maintain its valuation premium if growth remains stalled.

4. IS IT WORTH IT AT THIS PRICE?

At a forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations of 22.6x, Illinois Tool Works is valued in line with the peer median of 23.6x (XBRL). The market is currently pricing in approximately 6.2% long-term growth (CAPM analysis). While Illinois Tool Works’s organic revenue growth guidance of 1% to 3% falls short of this, the gap is bridged by a robust capital allocation strategy.

Illinois Tool Works plans $1.5 billion in share repurchases for 2026 (8-K), and its 1.9% buyback yield is the second-highest in its peer group (XBRL). This "buyback lift" brings the implied EPSEPSEarnings Per Share — the company's net profit divided by its share count; the most common per-share profitability metric growth to 8.1%, making the current valuation appear sustainable so long as margins remain at record levels. However, if growth slows to a GDP-pace of 2.5%, the justified multiple would drop to 12.2x, representing significant downside (CAPM analysis). The current price is only right if the 80/20 process continues to deliver the 100-basis-point margin expansion management has promised for 2026.

5. WHAT WOULD CHANGE THIS VIEW?

Cautious if operating margins contract or fail to meet the 100-basis-point expansion target in 2026, signaling that the 80/20 process has reached the limit of its effectiveness.
Constructive if organic growth consistently exceeds 3% while maintaining the 52.8% gross margin, proving that "Customer-back Innovation" can drive volume without sacrificing Illinois Tool Works's elite price-to-value ratio.

6. BOTTOM LINE

Structural Advantage: A proprietary 80/20 operating system and a massive portfolio of 21,800 patents that together enforce industry-leading margins. Bottom Line: Illinois Tool Works is a premier defensive industrial for investors who value margin stability and share buybacks over top-line expansion.

Source: Synthesis · LLM Analysis

3 min read

1. Top 5 Material Risks

Global Economic Conditions: Downturns, inflation, and supply chain disruptions in the 49 countries where Illinois Tool Works operates can reduce product demand, increase order cancellations, and complicate the collection of accounts receivable.
International Operations: With more than 50% of net sales derived from outside the United States, Illinois Tool Works faces risks including trade barriers, tariffs, political instability, and the potential for expropriation or nationalization of assets.
Currency Fluctuations: Because a significant portion of sales and operating costs are realized in foreign currencies—particularly in Europe—the strengthening of the U.S. Dollar against these currencies can adversely impact profitability.
Enterprise Strategy Execution: Illinois Tool Works’s 80/20 Front-to-Back process, which involves product line and customer base simplification, is intended to improve margins but may negatively impact organic revenue growth in the short term or fail to deliver expected results.
Raw Material Inflation: Illinois Tool Works faces upward pricing pressure on specialty materials, such as high labor-content fabrications, and may be unable to pass these costs on to customers in a timely manner.

2. Company-Specific Risks

Share Repurchase Uncertainty: Illinois Tool Works’s capital allocation strategy relies on free cash flow and short-term borrowings to fund share repurchases, which may be limited or delayed by market conditions, stock price, or the availability of U.S. cash.
Innovation and Intellectual Property: Future growth depends on the successful introduction of new products; failure to protect patents, trade secrets, and trademarks—or an inability to maintain license agreements—could erode Illinois Tool Works’s competitive position.
Goodwill and Intangible Assets: Significant amounts of goodwill and intangible assets on the balance sheet are subject to impairment charges if industry trends or economic conditions deteriorate.
Pension Funding Obligations: Illinois Tool Works’s defined benefit pension plans are sensitive to financial market performance and interest rates, which can increase funding obligations and impact cash flows.

3. Regulatory/Legal Risks

Data Privacy and Cybersecurity: Illinois Tool Works is subject to evolving global data privacy laws, such as the EU General Data Protection Regulation; failure to protect information technology infrastructure could lead to regulatory enforcement actions, fines, or litigation.
Compliance and Anti-Bribery: Due to its decentralized operating structure, Illinois Tool Works faces risks that employees or agents may violate anti-bribery, competition, or trade sanction laws, potentially resulting in substantial monetary penalties or criminal investigations.
Environmental Regulation: Lack of consistent climate legislation and potential mandates regarding greenhouse gas emissions or single-use plastics could force accelerated capital expenditures or operational restrictions.
Legal Proceedings: Illinois Tool Works is exposed to commercial, intellectual property, employment, and toxic tort claims, as well as government investigations, which may result in costs or settlements not fully covered by self-insurance or excess insurance programs.

4. Financial Impact Map

Global Economic Conditions → Accounts Receivable → Increased difficulty in collection and risk of counterparty insolvency. International Operations → Operating Income → Exposure to duties, tariffs, and trade barriers in 49 countries. Currency Fluctuations → Operating Income → Impact of U.S. Dollar strength against the Euro and other foreign currencies. Enterprise Strategy Execution → Operating Margins → Potential failure to realize expected improvements from 80/20 Front-to-Back process. Raw Material Inflation → Operating Margins → Inability to pass increased costs of specialty materials to customers.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
10-K	Feb 2026	Dec 2025
8-K	Feb 2026	—
10-Q	Oct 2025	Sep 2025
14A	Mar 2025	—