Illinois Tool Works (ITW): Assessing Valuation After BofA Upgrade and Brighter Profit Forecasts

Illinois Tool Works (ITW) stock is drawing attention after BofA upgraded its rating, citing stronger profit forecasts for 2026 and expectations for consistent margin expansion. The upgrade follows improved outlooks for ongoing earnings growth.

See our latest analysis for Illinois Tool Works.

ITW’s upgraded outlook from BofA comes after a modest rebound, with its 1-day share price return of 2.8% standing out following a period of weaker performance earlier in the year. Even so, the total shareholder return over the past year remains negative, while longer-term returns still indicate steady compound growth. This suggests momentum is building cautiously as investors consider the company’s improved profit trajectory.

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After this recent upgrade and signs of improving profitability, is Illinois Tool Works trading at a discount with room to run? Or is the market already factoring in brighter days ahead for the stock?

Most Popular Narrative: 5.1% Undervalued

Illinois Tool Works last closed at $247.77, while the most-followed narrative model places fair value at $261. With shares trading below this consensus valuation, investors are left questioning whether a rerating is overdue.

The company’s 90%+ produce-where-we-sell manufacturing strategy mitigates tariff impacts, which could help maintain or improve net margins by reducing costs associated with tariffs. Enterprise initiatives are projected to contribute 100 basis points or more to margin expansion, independent of volume. This suggests that ITW is well-positioned to improve operating margins.

Read the complete narrative.

What’s behind this punchy estimate? Hints point to aggressive profit margin goals and a calculated bet on process improvements paying off. Will these high expectations meet reality or get recalibrated if market conditions shift? The forecast numbers in this narrative could surprise even seasoned investors.

Result: Fair Value of $261 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, weak demand in key segments or unexpected stumbles in construction and automotive markets could challenge the company's optimistic growth targets.

Find out about the key risks to this Illinois Tool Works narrative.

Build Your Own Illinois Tool Works Narrative

If you see the numbers differently or want to investigate further, you can quickly craft your own view based on the latest data. Do it your way

A great starting point for your Illinois Tool Works research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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