Executive Summary
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.
Key Performance Indicators
Key Insights
Revenue: 4,059,000,000 USD; YoY +2.34%; QoQ +0.15%
Gross Profit: 1,806,000,000 USD; Margin 44.49%; YoY +5.61%; QoQ +1.35%
Operating Income: 1,112,000,000 USD; Margin 27.40%; YoY +5.70%; QoQ +4.12%
Net Income: 821,000,000 USD; Margin 20.22%; YoY -29.22%; QoQ +8.74%
EPS: 2.82 USD; Diluted 2.81 USD; YoY -28.06%; QoQ +9.30%
EBITDA: 1,124,000,000 USD; EBITDARatio 27.69%
Net Income Margin: 20.22%
Effective Tax Rate: 21.74%
Current Ratio: 1.53; Quick Ratio: 1.11; Cash Ratio: 0.22
Debt/Equity: 2.79; Deb...
Financial Highlights
Revenue: 4,059,000,000 USD; YoY +2.34%; QoQ +0.15%
Gross Profit: 1,806,000,000 USD; Margin 44.49%; YoY +5.61%; QoQ +1.35%
Operating Income: 1,112,000,000 USD; Margin 27.40%; YoY +5.70%; QoQ +4.12%
Net Income: 821,000,000 USD; Margin 20.22%; YoY -29.22%; QoQ +8.74%
EPS: 2.82 USD; Diluted 2.81 USD; YoY -28.06%; QoQ +9.30%
EBITDA: 1,124,000,000 USD; EBITDARatio 27.69%
Net Income Margin: 20.22%
Effective Tax Rate: 21.74%
Current Ratio: 1.53; Quick Ratio: 1.11; Cash Ratio: 0.22
Debt/Equity: 2.79; Debt Ratio: 0.61; Long-Term Debt to Capitalization: 0.705; Total Debt to Capitalization: 0.736
Interest Coverage: 14.83x
ROA: 5.60%; ROE: 25.6%; ROCE: 10.6%
Receivables Turnover: 1.25x; Inventory Turnover: 1.31x; Payables Turnover: 3.71x
EV/EBITDA: 7.13x; Dividend Yield: 0%
Price/Earnings Ratio (to date): 0 (not disclosed in provided data); Enterprise Value Multiples and Valuation context are based on the supplied peer dataset.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
4.06B |
2.34% |
0.15% |
| Gross Profit |
1.81B |
5.61% |
1.35% |
| Operating Income |
1.11B |
5.70% |
4.12% |
| Net Income |
821.00M |
-29.22% |
8.74% |
| EPS |
2.82 |
-28.06% |
9.30% |
Key Financial Ratios
operatingProfitMargin
27.4%
Management Commentary
Transcript highlights not provided in the data set. No management-call quotes are available in the supplied materials. Suggested enhancement: append management commentary on demand trends, mix shifts, price realization, and cost-out initiatives once transcript access is available.
Forward Guidance
Explicit management guidance for QQ3 2025 was not supplied in the provided materials. In absence of formal guidance, the analysis rests on historical quarterly cadence and macro-industrial backdrop. Potential scenarios:
- Base-case: Modest revenue growth around mid-single digits with stable margins, supported by ITW’s diversified end-markets and pricing discipline. Maintain gross margin in the mid-40s and operating margin near 27%–28%, with continued focus on cost containment and productivity.
-Bear-case: Industrials softness or a sharper OEM automotive cycle downturn could pressure revenue more materially; margin could compress if price/cost dynamics deteriorate or mix shifts away from high-margin segments.
-Bull-case: Offsetting factors include stronger-than-expected demand in Food Equipment and Construction Products, ongoing share gains from productivity programs, and favorable raw material costs leading to margin expansion beyond ~28% operating margin. Key monitorables: end-market demand signals, price realization, supply chain resilience, and working capital efficiency.