Illinois Tool Gears Up to Report Q3 Earnings: What to Expect?

Illinois Tool Works Inc. ITW is scheduled to release third-quarter 2025 results on Oct. 24, before market open.

The Zacks Consensus Estimate for third-quarter earnings has decreased 0.4% in the past 30 days. However, the company has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters. The average surprise was 2.3%.

The consensus estimate for revenues is pegged at $4.08 billion, up 2.9% from the year-ago quarter’s figure. The consensus estimate for adjusted earnings is pinned at $2.69 per share, indicating a 1.5% increase from the year-ago quarter’s number.

Let’s see how things have shaped up for Illinois Tool this earnings season.

Factors to Note Ahead of ITW’s Results

Growth in the institutional, restaurant and food retail markets in North America, along with higher service revenues and strong demand in the European warewashing equipment market, is likely to have boosted the performance of Illinois Tool’s Food Equipment segment. We expect the segment’s revenues to increase 3.7% year over year to $701.9 million.

Solid momentum in the equipment business due to higher demand in the Asia Pacific and the Middle East markets is expected to have aided the Welding segment’s performance in the third quarter. We expect the segment’s revenues to increase 4.3% from the year-ago quarter to $481.8 million.

Strong momentum in the ground support equipment, consumer packaging and specialty films businesses is likely to have driven ITW’s Specialty Products segment. We expect the Specialty Products segment’s revenues to increase 2.8% year over year to $450.3 million.

Automotive OEM segment’s performance is expected to have benefited from growth in auto build rates and strength in the electric vehicles market in China, along with market penetration gains in Europe. We expect the segment’s revenues to grow 4.4% year over year to $805.8 million in the third quarter.

However, weakness in the polymers and fluids businesses, owing to lower demand across North America and Europe, is expected to mar the Polymers & Fluids segment’s results. Despite this, higher demand for products in the hygiene end market and car care business is expected to have supported the segment’s performance. We expect the Polymers & Fluids segment’s revenues to increase 1% year over year to $452.4 million.

While softness in the MTS Test & Simulation business in North America, due to declining demand in the general industrial market, is expected to weigh on the Test & Measurement and Electronics segment’s results, higher demand for products in the semiconductor end market is expected to have provided some relief. We expect the segment’s revenues to increase 2.3% year over year to $712.9 million in the third quarter.

Nonetheless, cost management and enterprise initiatives are anticipated to have aided ITW’s margin performance. We expect ITW’s gross margin to increase 40 basis points to 44.2% in the second quarter.

Lower demand in the North American, European and Asia Pacific commercial and residential end markets is likely to have hurt the Construction Products segment’s revenues in the third quarter. We expect the segment’s revenues to decrease 0.5% from the year-ago quarter to $476.5 million.

ITW has considerable exposure to overseas markets. Given the company’s substantial international operations, foreign currency headwinds are likely to have marred its profitability.

Earnings Whispers

Our proven model predicts an earnings beat for ITW this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as elaborated below. 

Earnings ESP: ITW has an Earnings ESP of +0.35% as the Most Accurate Estimate is pegged at $2.70 per share, which is higher than the Zacks Consensus Estimate of $2.69. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: ITW currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Here are some companies, which according to our model, have the right combination of elements to beat on earnings in this reporting cycle.

Crane Company CR has an Earnings ESP of +4.93% and a Zacks Rank of 3 at present. ITW is slated to release third-quarter 2025 results on Oct. 27.

Crane’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 7.5%.

Allegion plc ALLE has an Earnings ESP of +1.24% and a Zacks Rank of 3 at present. The company is scheduled to release third-quarter 2025 results on Oct. 23.

Allegion’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7.9%.

Sealed Air Corporation SEE has an Earnings ESP of +1.28% and a Zacks Rank of 3 at present. SEE is slated to release third-quarter 2025 results on Nov. 4.

Sealed Air’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 19.0%.

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This article originally published on Zacks Investment Research (zacks.com).

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