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Why Is Illinois Tool Works (ITW) Down 2.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Illinois Tool Works (ITW - Free Report) . Shares have lost about 2.4% in that time frame, underperforming the S&P 500.
But investors have to be wondering, 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 reported second-quarter 2026 adjusted earnings of $2.84 per share, which surpassed the Zacks Consensus Estimate of $2.80. Earnings increased 10.1% year over year.
Illinois Tool’s revenues of $4.30 billion beat the consensus estimate of $4.18 billion. The top line increased 6.1% year over year, driven by an organic sales growth of 4.5%. Favorable foreign currency translation and acquisitions had a positive impact of 1.4% and 0.2%, respectively, in the quarter.
Segmental Performance
Test & Measurement and Electronics’ revenues were $769 million, up 12.1% year over year. Revenues from Automotive Original Equipment Manufacturer increased 1.3% year over year to $857 million. Food Equipment generated revenues of $692 million, up 1.6% year over year. Welding revenues were $549 million, up 14.7% year over year.
Construction Products’ revenues were up 4.3% year over year to $494 million. Revenues of $468 million from Specialty Products reflected an increase of 3% year over year. Polymers & Fluids’ revenues of $476 million increased 8.8% year over year.
Illinois Tool’s Margin Profile
Illinois Tool’s cost of sales increased 5.8% year over year to $2.40 billion. Selling, administrative and research and development expenses increased 6.1% year over year to $735 million. The operating margin was 26.7%, up 40 basis points (bps) from the year-ago quarter. Enterprise initiatives contributed 120 bps to the operating margin.
Balance Sheet and Cash Flow
At the end of the second quarter, Illinois Tool had cash and equivalents of $839 million compared with $851 million at the end of December 2025. Long-term debt was $6.55 billion compared with $6.68 billion at the end of December 2025.
In the second quarter of 2026, Illinois Tool generated net cash of $723 million from operating activities, reflecting an increase of 31.5% from the year-ago number. Capital spending on the purchase of plant and equipment was $92 million, down 8.9% year over year. Free cash flow was $631 million, up 40.5% year over year.
Illinois Tool’s 2026 Guidance
Illinois Tool raised its full-year 2026 financial guidance. It now expects earnings to be in the range of $11.35-$11.55 per share compared with $11.10-$11.50 expected earlier. Revenues are expected to increase 4-5% while organic revenues are anticipated to rise 3-4%. Operating margin is expected to be 26.5–27.5%. Enterprise initiatives are expected to contribute more than 100 bps to the operating margin.
Illinois Tool projects 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 23-24%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
VGM Scores
Currently, Illinois Tool Works has a average Growth Score of C, a score with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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, Dover Corporation (DOV - Free Report) , a stock from the same industry, has gained 3.4%. The company reported its results for the quarter ended June 2026 more than a month ago.
Dover reported revenues of $2.19 billion in the last reported quarter, representing a year-over-year change of +6.9%. EPS of $2.74 for the same period compares with $2.44 a year ago.
For the current quarter, Dover is expected to post earnings of $2.86 per share, indicating a change of +9.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Dover. Also, the stock has a VGM Score of D.
View the Zacks #1 Rank List
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Why Is Illinois Tool Works (ITW) Down 2.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Illinois Tool Works (ITW - Free Report) . Shares have lost about 2.4% in that time frame, underperforming the S&P 500.
But investors have to be wondering, 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 Tops Q2 Earnings & Revenue Estimates, Raises 2026 View
Illinois Tool reported second-quarter 2026 adjusted earnings of $2.84 per share, which surpassed the Zacks Consensus Estimate of $2.80. Earnings increased 10.1% year over year.
Illinois Tool’s revenues of $4.30 billion beat the consensus estimate of $4.18 billion. The top line increased 6.1% year over year, driven by an organic sales growth of 4.5%. Favorable foreign currency translation and acquisitions had a positive impact of 1.4% and 0.2%, respectively, in the quarter.
Segmental Performance
Test & Measurement and Electronics’ revenues were $769 million, up 12.1% year over year. Revenues from Automotive Original Equipment Manufacturer increased 1.3% year over year to $857 million. Food Equipment generated revenues of $692 million, up 1.6% year over year. Welding revenues were $549 million, up 14.7% year over year.
Construction Products’ revenues were up 4.3% year over year to $494 million. Revenues of $468 million from Specialty Products reflected an increase of 3% year over year. Polymers & Fluids’ revenues of $476 million increased 8.8% year over year.
Illinois Tool’s Margin Profile
Illinois Tool’s cost of sales increased 5.8% year over year to $2.40 billion. Selling, administrative and research and development expenses increased 6.1% year over year to $735 million. The operating margin was 26.7%, up 40 basis points (bps) from the year-ago quarter. Enterprise initiatives contributed 120 bps to the operating margin.
Balance Sheet and Cash Flow
At the end of the second quarter, Illinois Tool had cash and equivalents of $839 million compared with $851 million at the end of December 2025. Long-term debt was $6.55 billion compared with $6.68 billion at the end of December 2025.
In the second quarter of 2026, Illinois Tool generated net cash of $723 million from operating activities, reflecting an increase of 31.5% from the year-ago number. Capital spending on the purchase of plant and equipment was $92 million, down 8.9% year over year. Free cash flow was $631 million, up 40.5% year over year.
Illinois Tool’s 2026 Guidance
Illinois Tool raised its full-year 2026 financial guidance. It now expects earnings to be in the range of $11.35-$11.55 per share compared with $11.10-$11.50 expected earlier. Revenues are expected to increase 4-5% while organic revenues are anticipated to rise 3-4%. Operating margin is expected to be 26.5–27.5%. Enterprise initiatives are expected to contribute more than 100 bps to the operating margin.
Illinois Tool projects 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 23-24%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
VGM Scores
Currently, Illinois Tool Works has a average Growth Score of C, a score with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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, Dover Corporation (DOV - Free Report) , a stock from the same industry, has gained 3.4%. The company reported its results for the quarter ended June 2026 more than a month ago.
Dover reported revenues of $2.19 billion in the last reported quarter, representing a year-over-year change of +6.9%. EPS of $2.74 for the same period compares with $2.44 a year ago.
For the current quarter, Dover is expected to post earnings of $2.86 per share, indicating a change of +9.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Dover. Also, the stock has a VGM Score of D.