# Illinois Tool Works (ITW.US)

Canonical: https://gigainvestors.com/s/ITW

Analysis as of: 2026-10-16T07:29:26.674Z. Financial observations: FY1996–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

A wonderful business at too high a price

Quality tests for Buy: pass (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $271.19 per share; close as of 2026-10-15.

Estimated value: low $143.10 per share, central $183.77 per share, high $214.63 per share. Buy at or below the central value $183.77 per share. Valuation as of 2026-10-16T07:29:26.674Z; scenarios are not confidence intervals.

Expected annual return: 7.8% at the stated quote. About 7.8% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: pass

- 3 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 3

- Years with a net loss: 0

- Operating margin variation: 0.05×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.24×

- FY2018: 0.24×

- FY2019: 0.24×

- FY2020: 0.23×

- FY2021: 0.24×

- FY2022: 0.24×

- FY2023: 0.25×

- FY2024: 0.27×

- FY2025: 0.26×

- LTM to Jun 2026: 0.26×

### moat: pass

- ROIC, median of available years: 55.5%

- ROIC, second-lowest year: 44.8%

- Typical minus recent gross margin: -2.6 pp

- Typical gross margin (annual median): 41.1%

- Recent gross margin (lower of latest and 3-year median): 43.6%

- Years with nonpositive capital: 0

- Capital spending / revenue: 2.4%

- ROIC including acquisitions, ten-year median: 26.9%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 42.4%

- FY2017: 44.8%

- FY2018: 60.2%

- FY2019: 58.1%

- FY2020: 53.1%

- FY2021: 56.2%

- FY2022: 54.8%

- FY2023: 57.8%

- FY2024: 60.0%

- FY2025: 52.2%

### economics: pass

- Owner earnings / net income, 5-yr: 1.00×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $16B

- Net income, five-year total: $16B

- Return on incremental invested capital: 72.2%

- Working capital / revenue, annual change: 0.6 pp

- Working capital / revenue, change between three-year averages: 4.6 pp

- Working capital / revenue, final three-year average: 27.7%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 1.00×

- FY2023: 0.99×

- FY2024: 0.99×

- FY2025: 1.00×

- LTM to Jun 2026: 1.00×

### management: pass

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- potential debt-funded buybacks (informational)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 44.8% vs 57.8%

- Per-share earnings: 5.13 to 10.49 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -2.3%

- Ordinary dilution, 5-year annual growth: -1.7%

- Market cap gain: $29B

- Cumulative retained earnings: $11B

- Diluted shares, 10-year annual growth: -2.3%

- Diluted shares, 5-year annual growth: -1.7%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 9.3%

- Per-share value change: $5.36

- Per-share value, starting three-year median: $5.13

- Per-share value, ending three-year median: $10.49

- Buybacks concentrated in cheaper years (correlation): 0.88

- Average buyback yield: 2.5%

- Buyback history: 10 years

- Debt-funded buybacks: Yes

- Acquisition spending: $877M

- Cumulative net income, 10 years: $26B

- ROIC, first three-year median: 44.8%

- ROIC, last three-year median: 57.8%

Chart: Earnings per share; fiscal year observations.

- FY2016: $5.70

- FY2017: $4.86

- FY2018: $7.60

- FY2019: $7.74

- FY2020: $6.63

- FY2021: $8.51

- FY2022: $9.77

- FY2023: $9.74

- FY2024: $11.71

- FY2025: $10.49

### accounting: pass

- Sloan accruals: -0.4%

- Receivables to sales index (DSRI): 1.09×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 2.2%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.02×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 1.76×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -1.8%

- FY2017: -4.3%

- FY2018: -1.7%

- FY2019: -3.1%

- FY2020: -4.5%

- FY2021: 0.9%

- FY2022: 4.4%

- FY2023: -3.8%

- FY2024: 1.4%

- FY2025: -0.4%

## Holders

- [Thomas Gayner](https://gigainvestors.com/MKL): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Andrew Adams](https://gigainvestors.com/MPF): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Price needs cash profits to grow 9.2% a year for ten years · sales +2.6%

Story as of 2026-10-16T09:58:58.446Z; price observation 2026-10-15.

Price needs cash profits to grow 9.2% a year for ten years

- 2025-04-30: Illinois Tool Works posts lower quarterly profit on slowing demand ([ca.finance.yahoo.com](https://ca.finance.yahoo.com/news/illinois-tool-works-posts-lower-135030450.html))

- 2025-07-30: Illinois Tool Works lifts 2025 profit forecast betting on price hikes ([ca.finance.yahoo.com](https://ca.finance.yahoo.com/news/illinois-tool-works-lifts-2025-142754582.html))

- 2025-08-12: ITW Q2 Deep Dive: Flat Sales Mask Diverging End Markets, Management Raises Full-Year Outlook ([finance.yahoo.com](https://finance.yahoo.com/news/itw-q2-deep-dive-flat-044240231.html))

- 2025-10-25: ITW Q3 Deep Dive: Auto and Asia Offset Choppy Demand as Guidance Narrows ([finance.yahoo.com](https://finance.yahoo.com/news/itw-q3-deep-dive-auto-053114133.html))

- 2026-02-03: Illinois Tool Surpasses Q4 Earnings Estimates, Issues 2026 View ([finance.yahoo.com](https://finance.yahoo.com/news/illinois-tool-surpasses-q4-earnings-164300100.html))

- 2026-07-28: ITW Reports Second Quarter 2026 Results and Raises Full Year 2026 Guidance ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/itw-reports-second-quarter-2026-120000705.html))

### Sales · FY2025–2026

sales +2.6%; source https://www.sec.gov/Archives/edgar/data/49826/000004982626000008/itw-20251231.htm; observed 2026-02-13.

- FY2017: $14B 

- FY2018: $15B 

- FY2019: $14B 

- FY2020: $13B 

- FY2021: $14B 

- FY2022: $16B 

- FY2023: $16B 

- FY2024: $16B 

- FY2025: $16B 

- FY2026: $16B 

### Gross margin · FY2025

gross margin 44.1%; source https://www.sec.gov/Archives/edgar/data/49826/000004982626000008/itw-20251231.htm; observed 2026-02-13.

- FY2016: 40.3% 

- FY2017: 40.5% 

- FY2018: 40.5% 

- FY2019: 40.8% 

- FY2020: 41.3% 

- FY2021: 41.3% 

- FY2022: 40.8% 

- FY2023: 42.2% 

- FY2024: 43.6% 

- FY2025: 44.1% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in specialty industrial machinery; annual sales are USD 16 billion.

- Source: https://www.sec.gov/Archives/edgar/data/49826/000004982626000008/itw-20251231.htm (filed 2026-02-13); FY2025: revenue 16044000000; grossProfit 7075000000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); ITW.US: Illinois Tool Works Inc. provides industrial products and equipment in North America, Europe, the Middle East, Africa, the Asia Pacific, and South America. 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, cooking, refrigeration, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services. The Test & Measurement and Electronics segment produce and sells test and measurement; and electronic manufacturing and maintenance, repair, and operations solutions. 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 provides beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. The company serves automotive OEM and aftermarket, commercial food equipment, construction, general industrial, industrial capital goods, consumer durables, and other markets, as well as MRO markets. It 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.

### Why customers stay

Margins ranged from 42.2% to 44.1% during 2023–25; it earns 55.5% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); FY2023: grossProfit / revenue = 42.2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); FY2024: grossProfit / revenue = 43.6%.

- Source: https://www.sec.gov/Archives/edgar/data/49826/000004982626000008/itw-20251231.htm (filed 2026-02-13); FY2025: grossProfit / revenue = 44.1%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); 10-year return on capital observations [[2016,0.42433560517115543],[2017,0.4482139332938622],[2018,0.6018411541040455],[2019,0.580936956415717],[2020,0.5305244514023403],[2021,0.561688726766497],[2022,0.5476552554160139],[2023,0.5778188541171699],[2024,0.5998523684252344],[2025,0.5219003644670653]]; median 0.5546719910912554. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 41% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/49826/000004982626000008/itw-20251231.htm (filed 2026-02-13); Gross margin observations: [[2021,0.41272915946039435],[2022,0.40817223198594027],[2023,0.42161793009250637]]; range within 2 percentage points.

### Where the cash goes

Spends 0.6% of cash earnings on expansion; paid dividends in 10 of 10 years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); FY2016: growth capex 0; upkeep 273000000; owner earnings 2232000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); FY2017: growth capex 0; upkeep 297000000; owner earnings 1852000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); FY2018: growth capex 0; upkeep 364000000; owner earnings 2660000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); FY2019: growth capex 0; upkeep 326000000; owner earnings 2621000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); FY2020: growth capex 0; upkeep 236000000; owner earnings 2055000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); FY2021: growth capex 112000000; upkeep 184000000; owner earnings 2694000000. Growth capex / owner earnings = 0.041573867854491464.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); FY2022: growth capex 23000000; upkeep 389000000; owner earnings 3034000000. Growth capex / owner earnings = 0.007580751483190508.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); FY2023: growth capex 22508004.718480468; upkeep 432491995.28151953; owner earnings 2919508004.7184806. Growth capex / owner earnings = 0.007709519782820684.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); FY2024: growth capex 0; upkeep 437000000; owner earnings 3453000000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/49826/000004982626000008/itw-20251231.htm (filed 2026-02-13); FY2025: growth capex 19894896.02801925; upkeep 399105103.97198075; owner earnings 3063894896.0280194. Growth capex / owner earnings = 0.006493335020666228.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); Dividend observations: [[2016,821000000],[2017,941000000],[2018,1124000000],[2019,1321000000],[2020,1379000000],[2021,1463000000],[2022,1542000000],[2023,1615000000],[2024,1695000000],[2025,1785000000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/49826/000004982626000008/itw-20251231.htm (filed 2026-02-13); FY2025: cash repurchases 1500000000 USD.

### Are managers owners

Insiders own 0.4% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); ITW.US SharesStats.PercentInsiders = 0.372 percentage points; cache date 2026-10-16.

### What could break it

US import tariffs could raise product costs.

- Source: https://www.sec.gov/Archives/edgar/data/49826/000004982626000008/itw-20251231.htm (filed 2026-02-13); n Other income (expense) in the Statement of Income. Income taxes on the gain were more than offset by a discrete tax benefit of $107 million in the third quarter of 2024 related to the utilization of capital loss carryforwards upon the sale of Wilsonart. Refer to Note 5. Other Income (Expense) and Note 6. Income Taxes in Item 8. Financial Statements and Supplementary Data for additional information regarding this transaction.

On April 2, 2025, the United States government announced additional tariffs on goods imported to the U.S. from numerous countries. In response, certain countries retaliated with additional counter-tariffs or are working to negotiate with the U.S government regarding tariffs. Tariffs on goods from many countries became effective on August 1, 2025. The Company believes it is well positioned to minimize the impact of these tariffs because its businesses generally manufacture products in the markets where they are sold and the Company expects to recover the increased cost of tariffs through price increases. However, current tariff policies have introduced additional uncertainty and may negatively impact overall demand from the Company's customers. The Company continues to assess the impact of the tariffs and actions that can be taken to moderate and/or minimize their effects on the Company.

On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was enacted in the United States, which extended and modified certain provisions of the 2017 Tax Cuts and Jobs Act (the "TCJA"). The provisions of the OBBBA did not have any impact on the Company's operating results, financial position or cash flows for the twelve months ended December 31, 2025, and is not expected to have a material impact on future periods.

In 2025, the Company delivered solid financial results in a challenging and dynamic environment primarily due to the strong execution on enterprise initiatives as an outcome of the highly differentiated ITW Business Model.

Operating Revenue

Refer to the "Results of Operations for Total Company" and the "Results of Operations by Segment" sections for discussion of changes in operating revenue for 2025 compared to 2024 and 2024 compared to 2023.

Operating Expenses

Dollars in millions 2025 2024 2023

Operating Revenue

$ 16,044 $ 15,898 $ 16,107

Cost of revenue $ 8,969 $ 8,858 $ 9,316

Percent of operating revenue 55.9 % 55.7 % 57.8 %

Selling, administrative, and research and development expenses $ 2,779 $ 2,675 $ 2,638

Percent of operating revenue 17.3 % 16.8 % 16.4 %

Amortization and impairment of intangible assets $ 80 $ 101 $ 113

Percent of operating revenue 0.5 % 0.6 % 0.7 %

Cost of revenue was $8.97 billion in 2025, $8.86 billion in 2024 and $9.32 billion in 2023. Cost of revenue increased 1.2% in 2025 compared to

### What the price says

The price assumes cash profits grow 9.2% yearly over ten years; actual growth was 6.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-13); Ten-year compound average after fade. Initial solved rate 0.15643495157262477. Price 271.19; FX 1; discount 0.1; same compounder ten-year fade to terminal 0.03. FY2015 owner earnings/share 5.652526344231289 → FY2025 10.482021539610056. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $113.57 per share

- 2016-11: $125.18 per share

- 2016-12: $122.46 per share

- 2017-01: $127.20 per share

- 2017-02: $132.01 per share

- 2017-03: $132.47 per share

- 2017-04: $138.09 per share

- 2017-05: $141.22 per share

- 2017-06: $143.25 per share

- 2017-07: $140.71 per share

- 2017-08: $137.51 per share

- 2017-09: $147.96 per share

- 2017-10: $156.52 per share

- 2017-11: $169.25 per share

- 2017-12: $166.85 per share

- 2018-01: $173.67 per share

- 2018-02: $161.44 per share

- 2018-03: $156.66 per share

- 2018-04: $142.02 per share

- 2018-05: $143.70 per share

- 2018-06: $138.54 per share

- 2018-07: $143.33 per share

- 2018-08: $138.88 per share

- 2018-09: $141.12 per share

- 2018-10: $127.57 per share

- 2018-11: $139.05 per share

- 2018-12: $126.69 per share

- 2019-01: $137.31 per share

- 2019-02: $144.08 per share

- 2019-03: $143.53 per share

- 2019-04: $155.63 per share

- 2019-05: $139.64 per share

- 2019-06: $150.81 per share

- 2019-07: $154.23 per share

- 2019-08: $149.86 per share

- 2019-09: $156.49 per share

- 2019-10: $168.58 per share

- 2019-11: $174.33 per share

- 2019-12: $179.63 per share

- 2020-01: $174.98 per share

- 2020-02: $167.78 per share

- 2020-03: $142.12 per share

- 2020-04: $162.50 per share

- 2020-05: $172.46 per share

- 2020-06: $174.85 per share

- 2020-07: $184.99 per share

- 2020-08: $197.55 per share

- 2020-09: $193.21 per share

- 2020-10: $195.88 per share

- 2020-11: $211.09 per share

- 2020-12: $203.88 per share

- 2021-01: $194.21 per share

- 2021-02: $202.18 per share

- 2021-03: $221.52 per share

- 2021-04: $230.46 per share

- 2021-05: $231.76 per share

- 2021-06: $223.56 per share

- 2021-07: $226.67 per share

- 2021-08: $232.86 per share

- 2021-09: $206.63 per share

- 2021-10: $227.87 per share

- 2021-11: $232.15 per share

- 2021-12: $246.80 per share

- 2022-01: $233.92 per share

- 2022-02: $216.34 per share

- 2022-03: $209.40 per share

- 2022-04: $197.11 per share

- 2022-05: $208.07 per share

- 2022-06: $182.25 per share

- 2022-07: $207.76 per share

- 2022-08: $194.83 per share

- 2022-09: $180.65 per share

- 2022-10: $213.53 per share

- 2022-11: $227.47 per share

- 2022-12: $220.30 per share

- 2023-01: $236.04 per share

- 2023-02: $233.16 per share

- 2023-03: $243.45 per share

- 2023-04: $241.94 per share

- 2023-05: $218.73 per share

- 2023-06: $250.16 per share

- 2023-07: $263.32 per share

- 2023-08: $247.35 per share

- 2023-09: $230.31 per share

- 2023-10: $224.12 per share

- 2023-11: $242.21 per share

- 2023-12: $261.94 per share

- 2024-01: $260.90 per share

- 2024-02: $262.15 per share

- 2024-03: $268.33 per share

- 2024-04: $244.11 per share

- 2024-05: $242.75 per share

- 2024-06: $236.96 per share

- 2024-07: $247.28 per share

- 2024-08: $253.18 per share

- 2024-09: $262.07 per share

- 2024-10: $261.13 per share

- 2024-11: $277.52 per share

- 2024-12: $253.56 per share

- 2025-01: $259.16 per share

- 2025-02: $263.98 per share

- 2025-03: $248.01 per share

- 2025-04: $239.91 per share

- 2025-05: $245.08 per share

- 2025-06: $247.25 per share

- 2025-07: $255.97 per share

- 2025-08: $264.65 per share

- 2025-09: $260.76 per share

- 2025-10: $243.92 per share

- 2025-11: $249.28 per share

- 2025-12: $246.30 per share

- 2026-01: $261.26 per share

- 2026-02: $290.63 per share

- 2026-03: $260.29 per share

- 2026-04: $258.01 per share

- 2026-05: $247.28 per share

- 2026-06: $270.47 per share

- 2026-07: $286.95 per share

- 2026-08: $275.37 per share

- 2026-09: $257.28 per share

- 2026-10: $266.32 per share

## Annual estimated value (USD per share)

- FY2016: low $77.43 per share, central $87.39 per share, high $100.67 per share

- FY2017: low $81.54 per share, central $91.81 per share, high $105.49 per share

- FY2018: low $99.16 per share, central $131.16 per share, high $153.01 per share

- FY2019: low $105.77 per share, central $148.04 per share, high $172.92 per share

- FY2020: low $81.19 per share, central $91.53 per share, high $105.30 per share

- FY2021: low $97.74 per share, central $110.86 per share, high $128.34 per share

- FY2022: low $117.62 per share, central $143.72 per share, high $167.53 per share

- FY2023: low $132.61 per share, central $175.05 per share, high $204.56 per share

- FY2024: low $124.94 per share, central $154.13 per share, high $179.61 per share

- FY2025: low $135.95 per share, central $174.55 per share, high $203.84 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

Prior published observations retained from 2026-10-15T06:35:10.681Z where newer inputs omit a numeric field or fiscal period.

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/49826/000004982626000008/itw-20251231.htm); period 2025-12-31, filed 2026-02-13.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.