NYSEIndustrialsIndustrial - MachinerySnapshot 2026-08-31
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Create your account →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 growth. The current thesis is stable, supported by recent financial performance and management's commitment to growth targets.
The market appears to have priced in a stretched valuation compared to peers, reflecting a low level of fragility. There is a modest expectations gap, suggesting that while the stock is not overly expensive, it is not without risk.
Fundamentals are likely to continue improving, as management is on track to meet its revenue and earnings guidance for 2026. However, there is a moderate risk due to past performance issues, which could affect future results.
The thesis hinges on the performance of sector bellwethers and ITW's ability to maintain its growth trajectory. Any negative guidance or earnings misses from key industry players could impact ITW's momentum.
The most important moves since the prior daily snapshot.
Yes, our read has strengthened. The latest earnings beat supports a positive outlook. ITW forecasts 3% to 4% organic growth in 2026 while raising GAAP EPS guidance to $11.35 to $11.55. This guidance aligns with revenue growth targets and reinforces the reason to own the stock.
as of 2026-08-31
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, ITW shows promise for the next 1 to 3 years, driven by solid management execution and sector support. Not investment advice.
