Illinois Tool Works (ITW): Examining Valuation After Earnings Show Weaker Profits and Narrowed Outlook

Illinois Tool Works (ITW) shared its third quarter results last week, revealing modest sales growth but a meaningful drop in net income. The company also narrowed its full-year earnings guidance for 2025.

See our latest analysis for Illinois Tool Works.

The past year has been challenging for Illinois Tool Works, with supply chain headwinds, a narrowed outlook, and softer demand in key markets likely weighing on sentiment. While the recent buyback and another dividend hike highlight financial strength, the one-year total shareholder return slipped to -5.3% and the stock’s momentum has faded, even with a solid 21% total return over three years.

If the recent pause in ITW’s growth has you curious about where else the action is, explore See the full list for free. for companies gaining steam in the auto sector.

With ITW’s profits under pressure and its share price trailing the broader market, investors may be asking whether recent headwinds have created a buying opportunity or if Wall Street already has future growth fully priced in.

Most Popular Narrative: 6.5% Undervalued

Based on the most widely followed narrative, Illinois Tool Works is trading below its assessed fair value, with the stock closing at $243.92 versus a calculated fair value of $261.00. This sets the stage for a closer look at why analysts see more upside than the recent sluggish returns might suggest.

Customer-backed innovation and decentralized structure enhance ITW's growth and flexibility, driving market share gains and protecting earnings in dynamic market conditions. Strategic manufacturing and enterprise initiatives help mitigate tariff impacts and expand margins, supporting steady revenue growth across diversified sectors.

Read the complete narrative.

What powers this price target? The narrative forecasts a rare combination of profit resilience and future expansion, rooted in distinctive operational levers. Want the nuts and bolts behind this valuation? Learn more about the growth, margin, and pricing assumptions that separate ITW from the pack. See which numbers could surprise you.

Result: Fair Value of $261.00 (UNDERVALUED)

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

However, pressure on organic growth and regional automotive challenges could disrupt ITW’s recovery, which may stall the company’s expected progress.

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

Build Your Own Illinois Tool Works Narrative

If this perspective doesn't fit your outlook or you're keen to dig deeper, you can explore the data and build your own story in just a few minutes with Do it your way.

A great starting point for your Illinois Tool Works research is our analysis highlighting 4 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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