It has been about a month since the last earnings report for Illinois Tool Works (ITW). Shares have lost about 0.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Illinois Tool Works due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Illinois Tool Surpasses Q4 Earnings Estimates, Issues 2026 View
Illinois Tool reported fourth-quarter 2025 adjusted earnings of $2.72 per share, which surpassed the Zacks Consensus Estimate of $2.68. Earnings increased 7% year over year.
Illinois Tool’s revenues of $4.09 billion beat the consensus estimate of $4.07 billion. The top line increased 4% year over year, driven by a favorable foreign currency translation of 2.5%. Organic sales increased 1.3% in the quarter, while acquisitions had a favorable impact of 0.3%.
In 2025, it reported net revenues of $16 billion, which increased 0.9% year over year. However, the company’s adjusted earnings were $10.49 per share, down 10.4% year over year.
Segmental Performance
Test & Measurement and Electronics’ revenues were $789 million, up 6% year over year. Revenues from Automotive Original Equipment Manufacturer increased 6% year over year to $827 million.
Food Equipment generated revenues of $698 million, up 4% year over year. Welding revenues were $462 million, up 3% year over year.
Construction Products’ revenues were down 2% year over year to $431 million. Revenues of $433 million from Specialty Products reflected an increase of 4% year over year. Polymers & Fluids’ revenues of $457 million increased 7% year over year.
Illinois Tool’s Margin Profile
Illinois Tool’s cost of sales increased 2.8% year over year to $2.28 billion. Selling, administrative and research and development expenses increased 7.5% year over year to $704 million. The operating margin was 26.5%, up 30 basis points (bps) from the year-ago quarter. Enterprise initiatives contributed 140 bps to the operating margin.
Balance Sheet and Cash Flow
At the end of the fourth quarter, Illinois Tool had cash and equivalents of $851 million compared with $948 million at the end of December 2024. Long-term debt was $6.68 billion compared with $6.31 billion at the end of December 2024.
In 2025, Illinois Tool generated net cash of $3.13 billion from operating activities, reflecting a decrease of 4.7% from the year-ago number. Capital spending on the purchase of plant and equipment was $419 million, down 4.1% year over year. Free cash flow was $2.71 billion, down 4.8% year over year.
Illinois Tool’s 2026 Guidance
Illinois Tool issued its full-year 2026 financial guidance. It expects earnings to be in the range of $11.00 - $11.40 per share. Revenues are expected to increase 2-4% while organic revenues are anticipated to rise 1-3%. Operating margin is expected to be 26.5–27.5%. Enterprise initiatives are expected to contribute approximately 100 bps to the operating margin.
Illinois Tool projects the free cash flow to be more than 100% of its net income. The company expects to repurchase about $1.5 billion worth of shares. The effective tax rate is expected to be 23.5-24.5%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
VGM Scores
Currently, Illinois Tool Works has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock has a score of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Illinois Tool Works has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Illinois Tool Works is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Crane (CR), a stock from the same industry, has gained 7.3%. The company reported its results for the quarter ended December 2025 more than a month ago.
Crane reported revenues of $581 million in the last reported quarter, representing a year-over-year change of +6.8%. EPS of $1.53 for the same period compares with $1.26 a year ago.
For the current quarter, Crane is expected to post earnings of $1.44 per share, indicating a change of +3.6% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Crane. Also, the stock has a VGM Score of D.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Illinois Tool Works Inc. (ITW): Free Stock Analysis Report Crane Company (CR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
