Illinois Tool Works Inc. ITW reported first-quarter 2025 adjusted earnings of $2.38 per share, which surpassed the Zacks Consensus Estimate of $2.34. However, earnings decreased 2.5% year over year.

Illinois Tool’s revenues of $3,839 million narrowly missed the consensus estimate of $3,842 million. The top line declined 3.4% year over year due to an unfavorable foreign currency translation of 1.8%. Also, organic sales decreased 1.6%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

ITW’s Segmental Performance

Test & Measurement and Electronics’ revenues were down 6.3% year over year to $652 million. Our estimate for segmental revenues was $687.8 million. Revenues from Automotive Original Equipment Manufacturer decreased 3.7% year over year to $786 million. Our estimate for segmental revenues was $772.8 million.

Food Equipment generated revenues of $627 million, down 0.7% year over year. Our estimate for segmental revenues was $629.3 million. Welding revenues were $472 million, down 0.9% year over year. Our estimate for segmental revenues was $465.1 million.

Construction Products’ revenues were down 9.2% year over year to $443 million. Our estimate for segmental revenues was $453.8 million. Revenues of $435 million from Specialty Products reflected a decrease of 1% year over year. Our estimate for segmental revenues was $445.6 million. Polymers & Fluids’ revenues of $429 million declined 0.8% year over year. Our estimate for segmental revenues was $422 million.

Illinois Tool’s Margin Profile

Illinois Tool’s cost of sales increased 0.7% year over year to $2.16 billion. Selling, administrative and research and development expenses increased 4.4% year over year to $706 million. The operating margin was 24.8%, down 60 basis points (bps) from the year-ago quarter. Enterprise initiatives contributed 120 bps to the operating margin.

ITW’s Balance Sheet and Cash Flow

At the end of the first quarter, Illinois Tool had cash and equivalents of $873 million compared with $948 million at the end of December 2024. Long-term debt was $7.28 billion compared with $6.31 billion at the end of December 2024.

In the first three months of 2025, Illinois Tool generated net cash of $592 million from operating activities, reflecting an increase of 0.5% from the year-ago number. Capital spending on the purchase of plant and equipment was $96 million, up 1% year over year. Free cash flow was $496 million, up 0.4% year over year.

Illinois Tool’s 2025 Guidance

Illinois Tool reaffirmed its full-year 2025 financial guidance. ITW expects earnings to be in the range of $10.15-$10.55 per share. Revenues and organic revenues are expected to increase 0-2%. Operating margin is expected to be 26.5–27.5%. Enterprise initiatives are expected to contribute approximately 100 bps to the operating margin.

Illinois Tool projects free cash flow to be more than 100% of net income. The company expects to repurchase about $1.5 billion worth of shares. The effective tax rate is expected to be around 24%.

ITW’s Zacks Rank

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked companies are discussed below:

Griffon Corporation GFF currently sports a Zacks Rank of 1. GFF delivered a trailing four-quarter average earnings surprise of 14.7%. In the past 60 days, the consensus estimate for Griffon’s fiscal 2025 (ending September 2025) earnings has increased 2.9%.

Insteel Industries, Inc. IIIN currently carries a Zacks Rank #2 (Buy). IIIN delivered a trailing four-quarter average earnings surprise of 122.4%. In the past 60 days, the Zacks Consensus Estimate for Insteel Industries’ fiscal 2025 earnings has increased 34.8%.

Energy Recovery ERII presently carries a Zacks Rank of 2. ERII delivered a trailing four-quarter average earnings surprise of 161.6%. In the past 60 days, the consensus estimate for Energy Recovery’s 2025 earnings has increased 1.3%.

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Illinois Tool Works Inc. (ITW) : Free Stock Analysis Report

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