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ITW sees broad-based growth across segments, led by welding, electronics and construction products.
Enterprise initiatives added 120 basis points to operating margin in both first and second quarters.
ITW expects 3-4% organic revenue growth in 2026 despite automotive and foodservice weakness.
Illinois Tool Works Inc. (ITW - Free Report) is benefiting from positive momentum across most of its segments. Strong capital expenditure-related demand, broad-based growth across industrial and commercial markets, and healthy adoption of new products are aiding the Welding segment. The segment also witnessed healthy demand from infrastructure, energy, aerospace and defense markets. Order growth continues to outpace revenue growth, supporting the segment’s near-term prospects.
New product launches in the automotive aftermarket have been aiding revenues in the Polymers & Fluids segment. Strength across the polymers and fluids businesses also bodes well for the segment. Solid momentum in electronic assembly and semiconductor-related businesses, supported by expanded production capacity and differentiated product offerings, is benefiting the Test & Measurement and Electronics segment.
Robust commercial construction activity in North America, along with positive contributions from residential renovation and improving demand across Europe and Australia/New Zealand, is aiding the Construction Products segment's performance. Specialty Products also performed well, supported by growth in medical, aerospace and consumer packaging markets. Driven by strength across its businesses and increased contributions from new products, the company continues to expect total revenues on an organic basis to increase 3-4% in 2026.
Illinois Tool’s focus on enterprise initiatives continues to support profitability through operational efficiency, supply-chain optimization and demand-based innovation. These initiatives contributed 120 basis points to operating margin in both the first and second quarters of 2026. In the second quarter of 2026, operating margin expanded 40 basis points year over year to 26.7%, despite a 40-basis-point temporary drag from price-cost timing. Management expects enterprise initiatives to add more than 100 basis points to full-year 2026 operating margin.
Illinois Tool remains committed to rewarding its shareholders substantially through dividend payments and share buybacks. In the first six months of 2026, the company paid $928 million in dividends and repurchased shares worth $1.13 billion. In August 2026, the company hiked its dividend by 7% to $1.72 per share.
ITW’s Zacks Rank
In the past three months, this Zacks Rank #3 (Hold) company’s shares gained 3% against the industry’s 6.9% decline.
Image Source: Zacks Investment Research
However, Illinois Tool continues to face weakness across certain end markets. Soft demand in the institutional foodservice equipment market, particularly in North America, remains a drag on the Food Equipment segment. The Automotive OEM segment also continues to face headwinds from weak global vehicle production. The company continues to expect global vehicle build rate to decline 2% in 2026, indicating that sluggish automotive production is likely to weigh on the segment's performance.
Illinois Tool has been witnessing the impacts of escalating costs and expenses over time. In the first six months of 2026, the company’s cost of sales and selling, administrative and research and development expenses rose 5.1% and 4.1%, year over year, respectively. In the second quarter of 2026, price increases more than offset higher raw material costs in dollar terms, but timing lags between inflation and price actions diluted operating margin by 40 basis points.
Stocks to Consider
Some better-ranked companies from the same space are discussed below:
The company delivered a trailing four-quarter average earnings surprise of 13.7%. In the past 60 days, the consensus estimate for GNRC’s 2026 earnings has increased 8.5%.
Crane Company (CR - Free Report) presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for CR’s 2026 earnings has increased 3.2% in the past 60 days.
Helios Technologies (HLIO - Free Report) currently carries a Zacks Rank of 2. HLIO delivered a trailing four-quarter average earnings surprise of 13.1%.
In the past 60 days, the Zacks Consensus Estimate for Helios Technologies’ 2026 earnings has increased 10.4%.
View the Zacks #1 Rank List
Image: Bigstock
Illinois Tool Exhibits Strong Prospects Despite Persisting Headwinds
Key Takeaways
Illinois Tool Works Inc. (ITW - Free Report) is benefiting from positive momentum across most of its segments. Strong capital expenditure-related demand, broad-based growth across industrial and commercial markets, and healthy adoption of new products are aiding the Welding segment. The segment also witnessed healthy demand from infrastructure, energy, aerospace and defense markets. Order growth continues to outpace revenue growth, supporting the segment’s near-term prospects.
New product launches in the automotive aftermarket have been aiding revenues in the Polymers & Fluids segment. Strength across the polymers and fluids businesses also bodes well for the segment. Solid momentum in electronic assembly and semiconductor-related businesses, supported by expanded production capacity and differentiated product offerings, is benefiting the Test & Measurement and Electronics segment.
Robust commercial construction activity in North America, along with positive contributions from residential renovation and improving demand across Europe and Australia/New Zealand, is aiding the Construction Products segment's performance. Specialty Products also performed well, supported by growth in medical, aerospace and consumer packaging markets. Driven by strength across its businesses and increased contributions from new products, the company continues to expect total revenues on an organic basis to increase 3-4% in 2026.
Illinois Tool’s focus on enterprise initiatives continues to support profitability through operational efficiency, supply-chain optimization and demand-based innovation. These initiatives contributed 120 basis points to operating margin in both the first and second quarters of 2026. In the second quarter of 2026, operating margin expanded 40 basis points year over year to 26.7%, despite a 40-basis-point temporary drag from price-cost timing. Management expects enterprise initiatives to add more than 100 basis points to full-year 2026 operating margin.
Illinois Tool remains committed to rewarding its shareholders substantially through dividend payments and share buybacks. In the first six months of 2026, the company paid $928 million in dividends and repurchased shares worth $1.13 billion. In August 2026, the company hiked its dividend by 7% to $1.72 per share.
ITW’s Zacks Rank
In the past three months, this Zacks Rank #3 (Hold) company’s shares gained 3% against the industry’s 6.9% decline.
Image Source: Zacks Investment Research
However, Illinois Tool continues to face weakness across certain end markets. Soft demand in the institutional foodservice equipment market, particularly in North America, remains a drag on the Food Equipment segment. The Automotive OEM segment also continues to face headwinds from weak global vehicle production. The company continues to expect global vehicle build rate to decline 2% in 2026, indicating that sluggish automotive production is likely to weigh on the segment's performance.
Illinois Tool has been witnessing the impacts of escalating costs and expenses over time. In the first six months of 2026, the company’s cost of sales and selling, administrative and research and development expenses rose 5.1% and 4.1%, year over year, respectively. In the second quarter of 2026, price increases more than offset higher raw material costs in dollar terms, but timing lags between inflation and price actions diluted operating margin by 40 basis points.
Stocks to Consider
Some better-ranked companies from the same space are discussed below:
Generac Holdings Inc. (GNRC - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The company delivered a trailing four-quarter average earnings surprise of 13.7%. In the past 60 days, the consensus estimate for GNRC’s 2026 earnings has increased 8.5%.
Crane Company (CR - Free Report) presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for CR’s 2026 earnings has increased 3.2% in the past 60 days.
Helios Technologies (HLIO - Free Report) currently carries a Zacks Rank of 2. HLIO delivered a trailing four-quarter average earnings surprise of 13.1%.
In the past 60 days, the Zacks Consensus Estimate for Helios Technologies’ 2026 earnings has increased 10.4%.