Illinois Tool Works Inc. research snapshot
ITW AI stock analysis reads Illinois Tool Works as a high-quality seven-segment industrial compounder that posted record profitability in Q2 2026, raised full-year guidance for the second time this year, and is executing well on organic growth and margin expansion. At the August 2, 2026 data cutoff, ITW traded near $286.95 with a verified market capitalization near $82.56 billion. Q2 2026 organic growth was 4.5%, operating margin expanded 40 basis points to 26.7%, and GAAP EPS rose 10% to $2.84. The ITW AI stock forecast uses scenario ranges rather than a fixed price prediction because organic demand, operating margin expansion, buybacks, tariffs, raw material costs, rates, and the market multiple can change the outcome.
Current price
$286.95
Market cap
$82.56 billion
AI score
76 / 100
Rating
High-quality seven-segment compounder with record Q2 2026 profitability, raised full-year guidance, and a premium valuation that limits margin of safety
Trend status
Bullish short and medium term after a strong Q2; price holds above the 50-day and 200-day moving averages with RSI near 61
Data cutoff (updated monthly)
August 4, 2026
Informational use only. This page is not investment advice.
| Dimension | Conclusion | Confidence |
|---|---|---|
| Business quality | ITW sells engineered components, consumables, equipment, testing systems, welding products, polymers, construction products, and specialty industrial solutions across seven segments. Q2 2026 operating income of $1.15 billion was the most profitable quarter in company history. | High |
| Moat | The moat comes from niche leadership, application know-how, customer relationships, installed workflows, patent depth, brand portfolios, decentralized execution, and the 80/20 operating system rather than a network effect. Customer-Back Innovation contributed 3% to revenue growth in the first half of 2026. | Medium-high |
| Management | CEO Christopher O Herlihy and CFO Michael Larsen delivered record profitability, raised organic growth and EPS guidance a second time, and returned over $1.2 billion to shareholders in Q2 2026 through dividends and a pulled-forward $750 million buyback. | Medium-high |
| Financial trend | Q2 2026 revenue rose 6.1% to $4.301 billion with 4.5% organic growth, operating margin expanded 40 basis points to 26.7%, GAAP EPS rose 10% to $2.84, and free cash flow increased 41% with a 77% conversion rate. | High |
| Valuation | At $286.95, the financial-rigor tool calculates about 25.98x TTM EPS, 28.40x book value, 30.14x free cash flow per share, and a 2.24% dividend yield. The valuation assumes continued EPS growth, margin expansion, and a durable premium multiple. | High |
| Technical trend | Barchart and StockAnalysis showed ITW above its 50-day moving average near $265.45 and 200-day moving average near $262.12, with RSI near 60.71, ADX near 34.90, and 20-day average volume near 1.4 million shares. | Medium-high |
| Risk level | Main risks include a premium valuation, cyclical industrial demand, price-cost timing lags from resin and raw material inflation, tariff pressure, auto OEM and food equipment softness, a major storm that damaged two welding facilities, and multiple compression if growth fades. | Medium |
| AI confidence | Descriptive confidence is high because company releases, the Q2 2026 earnings call, StockAnalysis, and market data agree on the core numbers. Return confidence is lower because valuation drives a large part of the stock outcome. | High data confidence |
| Investment certainty | ITW may fit quality industrial watchlists, but higher certainty needs either a better entry price or proof that the second half can sustain the 4.5% organic growth run rate while margins and ROIC stay high. | Medium |
ITW AI stock forecast
The ITW AI stock forecast is scenario-based because the stock depends on organic sales, operating margin expansion, buybacks, tariff offsets, raw material costs, industrial demand, free cash flow conversion, and the valuation multiple. Using a $286.95 price reference and the raised $11.45 FY2026 GAAP EPS guidance midpoint, a three-year model checked with the financial rigor tool points to about $396 in a bullish case, $327 in a base case, and $229 in a bearish case before dividends.
$385 to $410 before dividends
More likely if all seven segments keep positive organic growth, welding and test and measurement and electronics momentum continues, CBI adds more than 3% to growth, buybacks reduce share count, price-cost normalizes, and investors keep ITW near a 26x earnings multiple.
$318 to $340 before dividends
More likely if EPS compounds at a mid-single-digit pace from the $11.45 FY2026 midpoint, organic growth moderates but stays positive, free cash flow conversion stays above 100%, and the market values ITW near 24x earnings.
$220 to $240 before dividends
More likely if industrial demand cools, price-cost pressure or tariffs erode margin gains, organic growth stalls after the first-half acceleration, the storm disrupts welding output, and the earnings multiple compresses toward 20x.
ITW AI technical analysis
ITW AI technical analysis is constructive as of the August 2, 2026 data cutoff after a strong Q2. Barchart and StockAnalysis showed a July 31 close near $286.95, a 50-day moving average near $265.45, a 200-day moving average near $262.12, RSI near 60.71, ADX near 34.90, and a 52-week range of $238.82 to $303.16.
| Level | Value | Why it matters |
|---|---|---|
| Current price reference | $286.95 close | StockAnalysis showed ITW at $286.95 at the July 31, 2026 close, up about 13.12% over the past 52 weeks. |
| Immediate support | $281 to $283 | The July 31 day range low near $281.87 and the prior close near $283.70 form the first support band under the quote. |
| 20-day support | $276 to $278 | The 20-day moving average near $276.98 is the first trend level to watch if profit taking appears after the earnings run. |
| 50-day support | $265 to $266 | The 50-day moving average near $265.45 marks the intermediate trend. A hold above it would keep the setup bullish. |
| Moving average cluster | $262 to $264 | The 100-day moving average near $263.92 and the 200-day moving average near $262.12 form a support cluster that defends the long-term trend. |
| Near resistance | $288 to $290 | The 5-day moving average near $288.62 is a minor overhead level that should give way if momentum continues. |
| Major resistance | $300 to $305 | The 52-week high near $303.16 is the main upside objective. A close above it would confirm a new high and likely draw breakout volume. |
| Momentum | RSI near 60.71, ADX near 34.90 | RSI is positive but not overbought, while ADX near 35 points to a strong trend with positive directional pressure (+DI near 33.69 versus -DI near 17.84). |
| Volume | 20-day average near 1.4 million shares | StockAnalysis showed 20-day average volume near 1,380,942 shares. Volume should be watched near $300 to $305 and around Q3 commentary. |
| Volatility | ATR(14) near $7.20, 14-day historic volatility near 31% | Volatility is moderate after the earnings move, so position sizing should allow for swings around guidance and macro headlines. |
| Invalidation | Close below $265, then below $262 | A close below the 50-day average would weaken the short-term setup. A sustained break below the 200-day average near $262 would challenge the long-term uptrend. |
ITW AI trading strategy
The ITW AI trading strategy below is a rules-based research framework, not personal advice. It connects price levels with organic growth, 80/20 execution, margin expansion, free cash flow conversion, buybacks, price-cost timing, tariffs, and valuation discipline.
Watch for ITW to hold the $276 to $283 moving-average zone and then close above $300 to $305 with improving volume, stable or raised 2026 EPS guidance, and evidence that welding and test and measurement momentum continues.
A failed breakout followed by a close below the 50-day moving average near $265 should reduce trend confidence, especially if organic growth or margin commentary weakens.
If ITW pulls back toward the $262 to $266 moving-average cluster without an earnings reset, compare the lower price with the raised $11.35 to $11.55 2026 GAAP EPS guide, free cash flow conversion, dividend growth, and the buyback plan.
Do not treat business quality as enough protection if the multiple stays near 26x while organic growth normalizes or price-cost pressure returns.
Track organic growth by segment, operating margin, Customer-Back Innovation contribution, free cash flow conversion, total debt, share repurchases, dividend growth, resin and raw material prices, tariffs, and welding and test and measurement order rates.
Position sizing should reflect that a strong industrial business can still deliver weak stock returns if purchased at too high a multiple.
Investment research summary
Customers pay ITW for specialized industrial products that improve reliability, productivity, safety, fastening, testing, cooking, welding, fluids, and manufacturing performance. The business is about solving recurring, application-specific customer problems across many niches.
ITW benefits from niche scale, application knowledge, customer-specific engineering, patented designs, brand depth, recurring consumables, decentralized operating discipline, and the 80/20 model. Customer-Back Innovation is now adding visible new-product revenue on top of the operating model.
The thesis fails if investors overpay for quality, organic growth normalizes after a strong first half, price-cost lags persist, tariffs or labor costs pressure profitability, auto and food equipment demand weaken, the storm disrupts welding, or the market stops assigning ITW a premium multiple.
Christopher O Herlihy and Michael Larsen are extending the ITW Business Model, enterprise initiatives, Customer-Back Innovation, shareholder returns, and the 2024 to 2030 strategy. Capital allocation quality matters because buybacks and dividends are a large part of shareholder return.
Welding, test and measurement and electronics, and polymers and fluids are benefiting from infrastructure, energy, aerospace, defense, electronics, and semiconductor-related demand. The offset is that several end markets remain cyclical and sensitive to capex, rates, and manufacturing activity.
ITW has excellent quality markers and improving growth, but the current price implies confidence in continued EPS growth, margin expansion, and a premium multiple. Margin of safety is moderate at best unless organic growth stays near 4% and free cash flow remains durable.
Source-backed data
Every metric below includes a source and last verification date.
| Metric | Value | Source | Last verified |
|---|---|---|---|
| Current price | $286.95 close on July 31, 2026 | StockAnalysis ITW Statistics | August 2, 2026 |
| Market capitalization | $82.56 billion verified from $286.95 price and 287.70 million shares | StockAnalysis ITW Statistics and financial-rigor market-cap check | August 2, 2026 |
| Shares outstanding | 287.70 million shares, down 1.86% year over year | StockAnalysis ITW Statistics | August 2, 2026 |
| Q2 2026 revenue | $4.301 billion, up 6.1% with 4.5% organic growth, 1.4% foreign currency, and 0.2% acquisition contribution | ITW Q2 2026 earnings call and release | August 2, 2026 |
| Q2 2026 earnings | GAAP EPS $2.84, up 10%; operating income $1.15 billion, a record; operating margin 26.7%, up 40 basis points | ITW Q2 2026 earnings call and release | August 2, 2026 |
| Q2 2026 cash return | Free cash flow up 41% with 77% conversion; over $1.2 billion returned through dividends and a pulled-forward $750 million buyback near $255 per share | ITW Q2 2026 earnings call | August 2, 2026 |
| FY2026 guidance | Organic growth raised to 3% to 4% with a 3.5% midpoint; GAAP EPS raised $0.15 to $11.35 to $11.55 with an $11.45 midpoint; operating margin 26.5% to 27.5%; free cash flow conversion above 100% | ITW Q2 2026 earnings call and release | August 2, 2026 |
| FY2025 revenue and net income | $16.044 billion revenue and $3.066 billion net income, cross-checked against ITW release, StockAnalysis, and Macrotrends | ITW FY2025 Results and StockAnalysis ITW Financials | August 2, 2026 |
| TTM financials | TTM revenue $16.47 billion, TTM net income $3.19 billion, TTM diluted EPS $11.04, free cash flow $2.74 billion | StockAnalysis ITW Statistics | August 2, 2026 |
| Cash and debt | $839 million cash and $9.69 billion total debt on the latest balance sheet | StockAnalysis ITW Balance Sheet | August 2, 2026 |
| Segment mix FY2025 | Automotive OEM about 20%, Test & Measurement and Electronics about 18%, Food Equipment about 17%, Welding about 12%, Construction Products about 11%, Polymers & Fluids about 11%, Specialty Products about 11% | StockAnalysis ITW Financials and ITW segment disclosures | August 2, 2026 |
| Valuation check | 25.98x trailing P/E, 28.40x P/B, 30.14x P/FCF, 2.24% dividend yield | StockAnalysis ITW Statistics and financial-rigor valuation verification | August 2, 2026 |
| Dividend | $6.44 annual dividend with 56 years of dividend growth and a 58.32% payout ratio | StockAnalysis ITW Statistics | August 2, 2026 |
| Analyst consensus | Hold with an average target of $298.48 across 16 analysts, ranging from $249 to $350; JPMorgan raised to $350 and UBS, Truist, Citi, and Baird raised targets after Q2 | StockAnalysis ITW Forecast and analyst ratings | August 2, 2026 |
| 52-week range | $238.82 to $303.16, up about 13.12% over the past 52 weeks | StockAnalysis ITW Statistics | August 2, 2026 |
| Technical indicators | 50-day moving average $265.45, 200-day moving average $262.12, RSI 60.71, ADX 34.90, 20-day average volume 1,380,942 | StockAnalysis ITW Statistics and Barchart technical snapshot | August 2, 2026 |
This ITW AI stock analysis page is an informational research tool, not investment advice, a recommendation, or a guarantee of future performance. Forecast scenarios are based on available public data at the stated cutoff date and can be wrong if earnings, valuation multiples, rates, industrial demand, tariffs, raw material costs, or company disclosures change. The data cutoff is August 2, 2026.
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