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Here's Why You Should Retain Illinois Tool Stock in Your Portfolio Now

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Illinois Tool Works Inc. (ITW - Free Report) is benefiting from positive momentum in the Food Equipment segment. Growth in the institutional end markets in North America, along with higher service revenues and strong demand in the European warewashing equipment end market, has been aiding the segment’s performance. Organic revenues from the segment increased 1.2% in the first quarter of 2025.

The company is also benefiting from strength in the Specialty Products segment. The segment is being driven by strong momentum in the ground support equipment, appliance, consumer packaging and specialty films businesses. Organic revenues from the segment increased 0.9% in the first quarter. Also, strength in the polymers business and growth in the fluids business have been aiding the Polymers & Fluids segment. Organic revenues from the segment inched up 1.7% in the first quarter.

The company is also benefiting from its enterprise initiatives, which focus on enhancing operational efficiency, optimizing the supply chain and building innovative solutions based on demand. Its enterprise initiatives contributed 120 basis points to the operating margin in the first quarter.

The company expects the operating margin to be in the range of 26.5–27.5% for 2025, indicating an increase of 20 basis points year over year at the mid-point. Enterprise initiatives are expected to contribute approximately 100 basis points to the operating margin in 2025.

Management is committed to rewarding shareholders through dividend payouts and share repurchases. In the first three months of 2025, ITW paid dividends worth $441 million and repurchased shares worth $375 million. In August 2024, it hiked its dividend by 7% to $1.50 per share.

ITW Stock’s Price Performance

Zacks Investment Research
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In the past year, the Zacks Rank #3 (Hold) company has gained 0.4% compared with the industry’s 0.7% growth.

However, softness in the MTS Test & Simulation business and the consumable semiconductor market in North America, due to declining demand in the industrial and commercial sectors, is worrisome for the Test & Measurement and Electronics segment. The segment’s revenues declined 5.4% year over year in the first quarter.

Also, lower demand in the North American, European and Asia Pacific commercial and residential end markets is weighing on the Construction Products segment, organic revenues from which declined 7.4% year over year in the first quarter.

The company's high debt level remains another concern. Its long-term debt balance at the end of first-quarter 2025 remained high at $7.3 billion, up 15.4% on a sequential basis. Exiting the first quarter, its short-term debt totaled $981 million. Considering its high debt level, the company’s cash and cash equivalents of $873 million do not look impressive.

Stocks to Consider

Some better-ranked stocks from the same space are discussed below.

AptarGroup, Inc. (ATR - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ATR delivered a trailing four-quarter average earnings surprise of 7.3%. In the past 60 days, the consensus estimate for AptarGroup’s 2025 earnings has increased 5.4%.

The Gorman-Rupp Company (GRC - Free Report) currently carries a Zacks Rank #2 (Buy). GRC delivered a trailing four-quarter average earnings surprise of 2.4%. In the past 60 days, the Zacks Consensus Estimate for Gorman-Rupp’s 2025 earnings has increased 0.5%.

Broadwind Energy (BWEN - Free Report) currently carries a Zacks Rank of 2. BWEN delivered a trailing four-quarter average earnings surprise of 61.1%. In the past 60 days, the consensus estimate for Broadwind Energy’s 2025 earnings has increased 33.2%.

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