Illinois Tool Works Inc (ITW) stock analysis
Illinois Tool Works Inc (ITW) clears 4 of this site's 8 mechanical value filters, 5 of 8 Buffett-style checks and 0 of 5 Lynch-style checks. At $279.24 it trades 59.0% above this site's neutral DCF value (a margin of safety of -59.0%). Its earnings quality rates Strong and it returns +4.1% to shareholders net of dilution. Figures are as of October 23, 2026, from SEC filings and market data refreshed weekly; this is educational analysis, not investment advice.
Data as of October 23, 2026. Refreshed weekly from SEC filings and market data.
What does Illinois Tool Works do?
Illinois Tool Works makes specialty industrial products and components, such as welding equipment, car parts, food-service equipment and construction fasteners, through about 80 largely independent divisions.
Brands and businesses it owns
- Hobart
- Miller
- Paslode
- Zip-Pak
What stands out about Illinois Tool Works?
- The share price implies 19.8% yearly growth. At $279.24, ITW's free cash flow of $10.28 per share would have to grow 19.8% a year, fading to 2.5% by year 10, for this site's DCF (10% discount rate) to match the price. This site's baseline starts at 8%, so the price asks for more growth than the baseline. Change the assumptions.
- Misses 2 of the 8 value filters. It fails PEG Ratio < 1.5 (2.66) and Price/Book < 8 (27.41); the other 4 pass and 2 were not evaluated. See every filter.
- Strongest against peers: return on equity. At 102% (peer median 15%) it ranks 1st of 17 among machinery stocks this site tracks. See the ranking.
- Weakest against peers: debt / equity. At 3.35 (peer median 0.54) it ranks 16th of 16 among machinery stocks this site tracks. See the ranking.
- Dividend raises 1 of 6 flags. Its trailing yield is 2.31%. See the Sustainable Dividend Screener.
How has Illinois Tool Works' share price moved?
The interactive price chart needs JavaScript.
Is Illinois Tool Works undervalued? The value diligence check
Every value-investing signal this site computes for this stock, gathered in one place: the same real numbers from the tools below, not a new score.
- Margin of safety (DCF) -59.0%
- P/E vs. its own history 24.8x · the middle Real range: 21.6x–29.0x over 5 years (net income per diluted share from each fiscal year's 10-K, paired with the real closing price at that fiscal year-end).
- Wall St. analyst rating Hold · 2.67/5 24 analysts this month: 1 strong buy, 1 buy, 13 hold, 7 sell, 2 strong sell (Finnhub).
- Altman Z″-Score (bankruptcy risk) 8.54 · Safe zone
- Earnings quality (is the profit real?) Strong · all 5 checks clean Beneish M-score −2.44 · accruals −0.4% of assets · 105% of profit arrived as cash · stock comp 0.4% of revenue · share count −1.9% a year. From the latest 10-K (year to Dec 2025) - see the Earnings Quality Screener for how each check is scored.
- Shareholder yield (cash back to owners) +4.1% net Latest fiscal year (2025): dividends 2.3% + buybacks 1.9% − stock comp 0.1%, as a share of today's market cap. Over 14 years its split-adjusted share count fell 41%. See Shareholder Yield Leaders.
- Capital needed to grow (See's test) $0.63 per $1 of new profit · See's-like Operating profit $3.4B → $4.2B, capital needed $9.5B → $10B, 2016–2025 (3-year averages); return on capital now 42% before tax. Buffett's See's Candies needed $0.42 per $1 of new profit, FlightSafety $3.20, a typical grower about $5. See Capital-Light Compounders.
- PEG (growth at a reasonable price) 2.66 · Well above fair P/E 24.8× ÷ 9.3% a year of growth behind it. 302nd lowest of 447 stocks with a usable PEG. Lynch's fair value is a PEG of 1; a very high PEG usually means almost no growth, a very low one a profit spike. See PEG Ratio Ranking.
- Compounder lenses (4) 2 of 4 · misses capital-light, price Capital-light growth: not cleared (profit grew 1.2×, under 2×); Profit is real: cleared; Cash to owners: cleared; Fair price (PEG): not cleared (PEG 2.66, over 1.5). See Compounders at a Fair Price, which also lets you move the PEG bar.
- Value trap check Clear
- Munger's Inversion Check 1 flag
- Standing vs. sector peers 4 of 7 measures above the median Compared with the 16 other machinery stocks this site tracks: 3 in the top third, 3 in the bottom third.
- Dividend payout sustainability 1/6 flags
How does Illinois Tool Works compare with its peers?
4 of 7 measures sit above the median of the 16 other machinery stocks tracked here, 3 in the top third and 3 in the bottom third.
- P/E ratiolower is cheaper · peer median 26.7× 24.8× –8th of 17
- Free-cash-flow yieldhigher is cheaper · peer median 4.2% 3.7% ✕13th of 17
- Return on equityhigher is better · peer median 15% 102% ✓1st of 17
- Net marginhigher is better · peer median 12.4% 19.4% ✓1st of 17
- Revenue growthhigher is better, year on year · peer median 5.2% 4.3% ✕12th of 17
- Debt / equitylower is safer · peer median 0.54 3.35 ✕16th of 16
- Dividend yieldamong dividend payers · peer median 1.28% 2.31% ✓4th of 17
Peers are the stocks this site tracks in the same sector group, not every listed competitor. The bar runs from the weakest peer (left) to the strongest (right); the tick is the middle. Measures that don't apply to a sector (cash-flow yield for banks, debt for financials) are left out.
What would Buffett & Lynch say?
Buffett's checklist is built around durable, profitable businesses bought at sensible prices, and ITW doesn't clear enough of it yet. In its favor: ITW is currently earning a strong return on shareholders' equity, and has kept that profitability up over five years, not just this year, converts sales into profit at healthy margins, has grown earnings per share at a solid clip over five years, and earns many times its interest expense, so debt service isn't a worry. Where it comes up short: ITW carries more debt relative to equity than he typically tolerates, is trading above what a conservative discounted-cash-flow estimate says it's worth right now, and trades rich relative to owner earnings, the real cash the business could pay out.
- ROE (TTM) > 11% ✓
- ROE (5yr avg) > 11% ✓
- Debt/Equity < 0.5 ✕
- Pretax margin > 15% ✓
- EPS growth (5yr) > 7% ✓
- Interest coverage > 5x ✓
- Trading below intrinsic value (DCF) ✕
- Price vs. owner earnings < 25x ✕
- Bonus: returning capital via buybacks FY2025
Lynch looked for growth stories that weren't overpriced for that growth, and ITW falls short of his bar. Where it comes up short: ITW doesn't pay much of a dividend, which is the main reason to own a slow grower in the first place, isn't even growing at the modest pace he'd expect from a slow grower, carries more debt than he liked to see, even allowing for the extra room a large, stable business gets, is priced too rich for how little growth is actually left in the business, and trades expensive relative to the cash it actually generates.
- Dividend yield > 2.5% ✕
- EPS growth 0%-10% ✕
- Debt/Equity < 0.6 ✕
- P/E < 20 ✕
- Price/FCF < 25 ✕
Quantitative approximations of each investor's documented approach, not endorsed by either investor or their estates - commentary, not this site's actual ranking criteria. Buffett never published a numeric checklist: only 2 of his 8 checks here trace to his own documented concepts ("owner earnings," from his 1986 shareholder letter, and "price is what you pay, value is what you get," his case against fixed P/E/P/B ceilings) - the other 6 (ROE, debt, margins, growth, interest coverage) use commonly-cited thresholds that are not numbers he himself published. The 8 hard filters below (plus the Munger check and Graham margin of safety) are this site's real, mechanical screen and are computed completely independently of the checklists above.
Berkshire Hathaway's own filing
Which of the 8 value filters does Illinois Tool Works pass?
- Market Cap > $25B $79.3B
- Trailing P/E < 25 24.83
- PEG Ratio < 1.5 2.66
- Price/Book < 8 27.41
- Price/Sales < 7 4.82
- EPS Growth YoY > -5% +10.2%
- vs 50-day MA (±12%) Not evaluated †
- vs 200-day MA (±12%) Not evaluated †
What is Illinois Tool Works' margin of safety?
-53% on 2026-10-07 → -59% on 2026-10-23 (5 weekly readings).
Where is Illinois Tool Works in its 52-week range?
What is the short interest in Illinois Tool Works?
9,189,704 shares short as of 2026-09-30 (FINRA settlement date). Reported twice a month, so this only changes roughly every two weeks, not daily.
What could go wrong with Illinois Tool Works? Munger's inversion check
"Invert, always invert." Instead of reasons to buy, these are reasons to hesitate, not a verdict, and not everything worth knowing about a business.
- Margin of safety, even in the bull case +6%
- Short interest under 5% of float 3.2%
- Passes most of the 6 fundamental filters 4/6 passed
- Price run-up backed by value, not just momentum +15% off 52wk low
- Debt/equity stable since 2016 1.84 → 2.38
Doesn't cover circle of competence, management quality, or accounting concerns: those need judgment, not data.
How much have Illinois Tool Works shareholders gained per year?
Earnings growth per share plus dividend.
An earnings-based proxy, not a stock-price total return - it doesn't capture multiple expansion/contraction or reinvested dividends. EPS from ITW's own 10-K filings; dividend yield is the current trailing yield on today's price, from the same weekly fetch as the rest of this site.
What do Illinois Tool Works' 10-year financials show?
From ITW's own 10-K filings (SEC EDGAR): up to the last 10 fiscal years. Press any year's bars for the exact figures.
Frequently asked questions about Illinois Tool Works
What kind of company is Illinois Tool Works?
Illinois Tool Works makes specialty industrial products and components, such as welding equipment, car parts, food-service equipment and construction fasteners, through about 80 largely independent divisions. Brands and businesses it owns include Hobart, Miller, Paslode and Zip-Pak. This site groups it with Machinery stocks.
Is Illinois Tool Works trading above or below its DCF value?
At $279.24, ITW trades 59.0% above this site's neutral DCF value of $175.62 per share, a margin of safety of −59.0%. That DCF projects free cash flow for 10 years, with growth starting at 8% and fading to 2.5%, discounted at 10%; it is one set of assumptions, not a forecast. Test your own in the Intrinsic Value Calculator.
How many of this site's 8 value filters does Illinois Tool Works pass?
ITW passes 4 of 8. It passes Market Cap > $25B ($79.3B), Trailing P/E < 25 (24.83), Price/Sales < 7 (4.82) and EPS Growth YoY > -5% (+10.2%). It misses PEG Ratio < 1.5 (2.66) and Price/Book < 8 (27.41). vs 50-day MA (±12%) and vs 200-day MA (±12%) were not evaluated, because the moving-average checks only run on stocks that clear the fundamentals first. The 8-filter list shows every stock that passes all of them.
What growth is Illinois Tool Works' share price pricing in?
At $279.24, ITW's free cash flow of $10.28 per share would have to grow 19.8% a year, fading to 2.5% by year 10, for this site's DCF (10% discount rate) to match the price. This site's baseline starts at 8%, so the price asks for more growth than the baseline. Change the assumptions.
How much cash does Illinois Tool Works return to shareholders?
ITW's net shareholder yield is +4.1%: the cash it returns through dividends and buybacks, minus stock-based compensation, as a share of its market value. Latest fiscal year (2025): dividends 2.3% + buybacks 1.9% − stock comp 0.1%, as a share of today's market cap. Over 14 years its split-adjusted share count fell 41%. Its trailing dividend yield is 2.31%, paid out of 62% of its free cash flow; the dividend-sustainability check raises 1 of 6 flags (high leverage). See Shareholder Yield Leaders and the Sustainable Dividend Screener.
When does Illinois Tool Works report earnings next?
Illinois Tool Works's next earnings report is expected on October 27, 2026 before the market opens, with analysts expecting earnings of $3.00 per share. Dates come from the Finnhub earnings calendar and can move. In its last 4 quarters it beat the estimate 4 times, by an average of +1.5%.
Where do these numbers come from?
- Financial statements: Illinois Tool Works's 10-K annual report for the year ended Dec 31, 2025, filed Feb 13, 2026 (filing index). Every earlier year in the 10-year financials comes from the company's older 10-K filings, all listed on SEC EDGAR.
- Prices and market data: quotes, P/E and analyst ratings from Finnhub; daily price history and the 52-week range from Twelve Data, both refreshed weekly. Short interest comes from FINRA, reported twice a month.
- How to check a figure: click any number in the card above to see its exact source, and read the Editorial Standards for every rule behind the checks.
About this Illinois Tool Works Inc analysis
This page shows every value-investing check the site runs on Illinois Tool Works Inc (ITW) in one place: the 8 mechanical filters, the Buffett and Lynch checklists, a margin of safety from a disclosed DCF, earnings quality, shareholder yield and how it ranks against its sector peers. The numbers come from SEC filings and public market data, refreshed weekly, and the same rules apply to every stock on the stock list. See Editorial Standards for the sources and the rules, or run your own filters in the stock screener.