Illinois Tool Works (ITW.N): Strong Topline Drives Upside And Supports Raised Outlook

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Illinois Tool Works (ITW.N): Strong Topline Drives Upside And Supports Raised Outlook

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28 Jul 2026 09:41:39 ET │ 11 pages

Illinois Tool Works (ITW.N)

Strong Topline Drives Upside And Supports Raised Outlook

CITI'S TAKE

Neutral ITW reported 2Q26 results that we view as solid (2Q26 EPS of $2.84 vs.

Factset consensus $2.79 and our $2.78; operating income of $1,147mn Catalyst Watch: Upside, expires 11-OCT-26

was above consensus of $1,121mn and our $1,119mn), led by material Price (27 Jul 26 16:00) US$284.82

acceleration in ITW’s more capex-levered business segments. Though Target price US$287.00

segment by segment demand appears reflective of still mixed trends Expected share price return 0.8%

overall, raised ’26 organic growth and EPS outlooks are an encouraging Expected dividend yield 1.7%

sign and commentary noting “significantly higher contribution from new Expected total return 2.5%

products” could be viewed as a positive indicator of ITW’s growth efforts

Market Cap US$81,943M continuing to gain momentum. 2Q op margin was just below our model

and ’26 incremental margin outlook of approximately 40% is below our

pre-print 50%, but we think still represents solid operating leverage; ITW

noted that while price/cost was favorable on a dollar basis in 2Q “timing Andrew KaplowitzAC

lags between inflation and price adjustments modestly diluted margins.” +1-212-816-0642

andrew.kaplowitz@citi.com

2026 Guidance — ITW raised ’26 EPS guidance to $11.35-$11.55 (from $11.10- Vladimir Bystricky

$11.50 and vs. our pre-report $11.30/Factset consensus $11.31) with ’26 tax rate vladimir.bystricky@citi.com

expectation of 23.0%-24.0% unchanged; organic growth outlook is now expected to

be +3%-4% (from +1%-3% and vs. our pre-report +2.2%) and operating margin is