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Here's Why Hold Strategy is Apt for Illinois Tool Works Stock Now
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Key Takeaways
ITW posted Q1 2025 organic growth in the Specialty Products, Food Equipment and Polymers and Fluids segments.
Enterprise initiatives boosted Q1 operating margin by 120 basis points; 2025 margin seen at 26.5-27.5%.
Soft demand in the Test and Measurement and Construction Products segments weighed on overall performance.
Illinois Tool Works Inc. (ITW - Free Report) is witnessing solid momentum in the Specialty Products segment. The segment is being driven by strength in the ground support equipment, appliance, consumer packaging and specialty films businesses. Organic revenues from the segment increased 0.9% in the first quarter of 2025.
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 Food Equipment segment’s performance. Organic revenues from the segment increased 1.2% 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.
Illinois Tool Work’s enterprise initiatives, which focus on enhancing operational efficiency, optimizing the supply chain and building innovative solutions, are supporting its margin performance. 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 midpoint.
ITW remains committed to rewarding its shareholders substantially through dividend payments and share buybacks. In the first quarter of 2025, it used $441 million and $375 million in paying out dividends and repurchasing shares, respectively. Also, in 2024, it paid dividends worth $1.7 billion and bought back common stock for approximately $1.5 billion. In August 2024, the company hiked its dividend by 7% to $1.50 per share.
ITW Stock’s Price Performance
Image Source: Zacks Investment Research
In the past year, the Zacks Rank #3 (Hold) company has gained 0.3% compared with the industry’s 3.3% growth.
Despite the positives, the company has been experiencing softness in the MTS Test & Simulation business and the consumable semiconductor market in North America. Declining demand in the industrial and commercial sectors has been affecting the Test & Measurement and Electronics segment’s revenues, which 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 is another concern. Exiting first-quarter 2025, its long-term debt balance was pegged at $7.3 billion, up 15.4% on a sequential basis. 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.
Key Picks
Some better-ranked stocks from the same space are discussed below.
HWM delivered a trailing four-quarter average earnings surprise of 8.8%. In the past 60 days, the consensus estimate for Howmet’s 2025 earnings has increased 6.5%.
AptarGroup, Inc. (ATR - Free Report) presently sports a Zacks Rank of 1. 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%.
Federal Signal Corporation (FSS - Free Report) currently carries a Zacks Rank #2 (Buy). FSS delivered a trailing four-quarter average earnings surprise of 6.4%. In the past 60 days, the Zacks Consensus Estimate for Federal Signal’s 2025 earnings has increased 1.6%.
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Here's Why Hold Strategy is Apt for Illinois Tool Works Stock Now
Key Takeaways
Illinois Tool Works Inc. (ITW - Free Report) is witnessing solid momentum in the Specialty Products segment. The segment is being driven by strength in the ground support equipment, appliance, consumer packaging and specialty films businesses. Organic revenues from the segment increased 0.9% in the first quarter of 2025.
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 Food Equipment segment’s performance. Organic revenues from the segment increased 1.2% 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.
Illinois Tool Work’s enterprise initiatives, which focus on enhancing operational efficiency, optimizing the supply chain and building innovative solutions, are supporting its margin performance. 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 midpoint.
ITW remains committed to rewarding its shareholders substantially through dividend payments and share buybacks. In the first quarter of 2025, it used $441 million and $375 million in paying out dividends and repurchasing shares, respectively. Also, in 2024, it paid dividends worth $1.7 billion and bought back common stock for approximately $1.5 billion. In August 2024, the company hiked its dividend by 7% to $1.50 per share.
ITW Stock’s Price Performance
Image Source: Zacks Investment Research
In the past year, the Zacks Rank #3 (Hold) company has gained 0.3% compared with the industry’s 3.3% growth.
Despite the positives, the company has been experiencing softness in the MTS Test & Simulation business and the consumable semiconductor market in North America. Declining demand in the industrial and commercial sectors has been affecting the Test & Measurement and Electronics segment’s revenues, which 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 is another concern. Exiting first-quarter 2025, its long-term debt balance was pegged at $7.3 billion, up 15.4% on a sequential basis. 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.
Key Picks
Some better-ranked stocks from the same space are discussed below.
Howmet Aerospace (HWM - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HWM delivered a trailing four-quarter average earnings surprise of 8.8%. In the past 60 days, the consensus estimate for Howmet’s 2025 earnings has increased 6.5%.
AptarGroup, Inc. (ATR - Free Report) presently sports a Zacks Rank of 1. 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%.
Federal Signal Corporation (FSS - Free Report) currently carries a Zacks Rank #2 (Buy). FSS delivered a trailing four-quarter average earnings surprise of 6.4%. In the past 60 days, the Zacks Consensus Estimate for Federal Signal’s 2025 earnings has increased 1.6%.