ITW
Illinois Tool Works Inc.
Industrials · Specialty Industrial Machinery · United States · Stock
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The composite score of 52.1/100 reflects a split profile: profitability is a clear strength with a 26.3% operating margin and 19.1% net margin in FY2025, but growth, momentum, and financial health all weigh on the overall result.
- Revenue grew only 0.9% year-over-year while net income fell 12.1%, and quarterly results show no sequential acceleration, which together suppress the growth and momentum components of the score.
- The elevated debt-to-equity ratio of 2.38 and the absence of any macro theme assignment further limit the total score, resulting in a medium risk rating and a 'Research Further' label.
Why Not Higher
- The double-digit declines in net income (-12.1%) and diluted EPS (-10.4%) from FY2024 to FY2025, combined with near-flat revenue growth of just 0.9%, prevent the strong profitability metrics from translating into a higher composite score.
- ITW is not assigned to any of the 24 tracked macro themes, meaning the theme component contributed zero to the total score, and the debt-to-equity ratio of 2.38 caps the financial health assessment at a mid-range level.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew modestly from FY2024 to FY2025, rising from $15,898,000,000 to $16,044,000,000 (+0.9%), while net income declined from $3,488,000,000 to $3,066,000,000 (-12.1%) and diluted EPS fell from $11.71 to $10.49 (-10.4%) over the same period.
The model penalized the near-flat top-line growth and the meaningful double-digit contractions in both net income and EPS from FY2024 to FY2025, resulting in a below-average growth score.
In FY2025, ITW posted an operating margin of 26.3%, a net margin of 19.1%, and a return on assets of 19.0%, all reflecting high levels of earnings efficiency relative to revenue and assets.
The model rewarded these strong margin and return figures, as a 26.3% operating margin and 19.0% return on assets in FY2025 indicate a highly efficient business capable of converting revenue into profit at an exceptional rate.
In FY2025, ITW carried a debt-to-equity ratio of 2.38 against total assets of $16,148,000,000, indicating a meaningfully leveraged balance sheet relative to equity.
The model's mid-range score reflects the elevated leverage captured by the 2.38 debt-to-equity ratio in FY2025; while the asset base is substantial, the high reliance on debt relative to equity tempers the financial health assessment.
Over the last four reported quarters, revenue was relatively stable—$4,053,000,000 in 2025Q2, $4,059,000,000 in 2025Q3, $4,093,000,000 in 2025Q4, and $4,016,000,000 in 2026Q1—while operating income declined from $1,112,000,000 in 2025Q3 to $1,020,000,000 in 2026Q1, and net income ranged from $755,000,000 to $821,000,000 with no clear upward trend.
The model assigned a near-midpoint score reflecting the absence of meaningful sequential acceleration; revenue was essentially flat across the four quarters and operating income showed a modest softening into 2026Q1, limiting upward momentum signals.
ITW has grown its dividends per share consistently—from $5.06 in FY2022 to $5.42 in FY2023, $5.80 in FY2024, and $6.22 in FY2025—while the dividend payout ratio stood at 58.2% of net income in FY2025.
The model recognized the unbroken multi-year dividend growth streak as a positive signal, while the 58.2% payout ratio in FY2025 suggests a meaningful but not excessive commitment of earnings to dividends, yielding a moderately above-average dividend score.
ITW is not currently assigned to any of the 24 tracked macro themes in the model.
Because no macro theme assignment exists for this security, the theme component contributed no score; this reflects the model's current classification state and is not an indicator of the company's business quality.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Illinois Tool Works (ITW) is a highly profitable industrial company that earned a 26.3% operating margin and 19.1% net margin in FY2025, but its overall score of 52.1/100 reflects meaningful headwinds including a 12.1% decline in net income and a 10.4% drop in diluted EPS year-over-year, alongside an elevated debt-to-equity ratio of 2.38. Revenue growth was nearly flat at +0.9% from FY2024 to FY2025, and quarterly operating income softened into early 2026, limiting momentum signals. On the positive side, ITW has consistently grown its dividend per share from $5.06 in FY2022 to $6.22 in FY2025, demonstrating a reliable income track record. The model's medium risk rating and 'Research Further' label reflect a business with exceptional profitability metrics but notable leverage, declining earnings, and stagnant growth.
Plain English
ITW is a very profitable company — it keeps about 19 cents of profit for every dollar of revenue — but its earnings actually shrank last year, it carries a lot of debt, and its sales are barely growing, which is why the model says to dig deeper before deciding anything.
Bull Case vs. Bear Case
Bull Case
- Exceptional profitability: ITW posted a 26.3% operating margin and a 19.0% return on assets in FY2025, indicating the business converts revenue into profit at a rate well above most industrial peers.
- Consistent dividend growth: Dividends per share have risen every year from $5.06 in FY2022 to $6.22 in FY2025, with a payout ratio of 58.2% in FY2025 that suggests the dividend is supported without overextending earnings.
- Substantial asset base: With $16,148,000,000 in total assets in FY2025, ITW has a large operational foundation that underpins its ability to generate strong margins and sustain its dividend program.
Bear Case
- Declining earnings: Net income fell 12.1% from $3,488,000,000 in FY2024 to $3,066,000,000 in FY2025, and diluted EPS dropped 10.4% from $11.71 to $10.49, signaling meaningful profit erosion despite stable revenues.
- High financial leverage: A debt-to-equity ratio of 2.38 in FY2025 indicates ITW relies heavily on debt financing, which could constrain financial flexibility and amplify downside risk in a tougher economic environment.
- Stagnant momentum: Quarterly revenue was essentially flat across the last four reported periods (ranging from $4,016,000,000 to $4,093,000,000), and operating income declined from $1,112,000,000 in 2025Q3 to $1,020,000,000 in 2026Q1, offering little evidence of near-term acceleration.
What Could Change the Picture
Bullish Triggers
- A meaningful rebound in net income and EPS growth — reversing the 12.1% and 10.4% declines seen from FY2024 to FY2025 — would signal that the profitability engine is re-accelerating and could support a more constructive view.
- A reduction in the debt-to-equity ratio from its current 2.38 level would improve financial health and reduce leverage risk, potentially warranting a higher overall assessment.
Bearish Triggers
- If quarterly operating income continues to decline below the $1,020,000,000 level seen in 2026Q1, it would suggest the margin strength observed in FY2025 is eroding, undermining the core profitability thesis.
- A cut or pause in dividend growth — which has been unbroken from $5.06 in FY2022 to $6.22 in FY2025 — would remove one of the key positive signals currently supporting the investment case.
Risk Profile
Medium RiskITW's debt-to-equity ratio of 2.38 in FY2025 reflects a meaningfully leveraged balance sheet that could limit financial flexibility if conditions deteriorate. Compounding this, quarterly operating income declined from $1,112,000,000 in 2025Q3 to $1,020,000,000 in 2026Q1, suggesting some softening in near-term earnings power.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.