Illinois Tool Works Inc. (0J8W.L) reported QQ3 2025 revenue of $4.059 billion, marking a modest year-over-year gain of 2.34% and a fractional 0.15% QoQ increase. The company delivered solid gross margins, with gross profit of $1.806 billion and a gross margin of 44.49%, alongside a robust operating margin of 27.40% (operating income of $1.112 billion). Net income stood at $821 million, translating to a net margin of 20.22% and earnings per share (EPS) of $2.82. Despite the favorable margin trajectory, net income declined on a year-over-year basis by 29.22%, with a QoQ increase of 8.74%. The negative year-over-year net income delta appears to reflect mix, tax, or non-operating items rather than a deterioration in operating profitability, given a relatively stable revenue base and improving gross and operating margins.
ITW maintains a high-quality margin profile within the diversified industrials space, supported by a broad, multi-segment portfolio across Automotive OEM, Food Equipment, Test & Measurement & Electronics, Welding, Polymers & Fluids, Construction Products, and Specialty Products. The company’s efficiency and pricing discipline contributed to a meaningful gross margin expansion year over year. On the balance sheet, ITW exhibits a solid liquidity position (current ratio 1.53, quick ratio 1.11) and a moderate leverage framework (debt ratio 0.61, debt-to-capitalization 0.736, interest coverage 14.83x). However, cash flow visibility is limited in the provided data, with operating cash flow per share and free cash flow per share shown as zero. The enterprise value to EBITDA multiple stands at 7.13x, suggesting a relatively modest valuation stance versus broader industrial peers in the supplied set.
Looking ahead, ITW’s earnings quality and diversified end-market exposure position it to weather cyclicality better than many peers, but the absence of explicit forward guidance in the provided data necessitates a scenario-based view. If macro conditions stabilize and end-market demand remains durable, ITW could maintain mid-single-digit revenue growth with continued margin retention, though earnings could be sensitive to tax, mix, and input costs. Investors should monitor (1) end-market demand variation across Automotive OEM, Construction, and Food Equipment; (2) any cadence shifts in operating leverage; and (3) cash generation and working capital dynamics to validate sustainability of returns.