Buffett Brain · Research note
Score updated 26 Sept 2026
ITW· Industrials
Illinois Tool Works
Illinois Tool Works shows strong industrial margins but valuation and growth metrics temper enthusiasm.
Buffett fit
Partial fit
Owner
79
Durability
72
Management
41
Price
39
Score updated 26 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Industrials stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If we owned Illinois Tool Works outright, we'd be pleased with its top-quintile of 24.7% and consistent profitability over the past five years.
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The durability of Illinois Tool Works is supported by its strong margins and diversified industrial product lines.
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The company has effectively reduced its share count by 1.86% annually over five years, supporting shareholder value.
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With a of 22.7 and an yield of 3.81%, the valuation appears stretched relative to a 'no-brainer' entry point of 8-10% yield.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
7- 1 of 24.7% is top-quintile in the Industrials sector.
- 2 of 26.4% is significantly above the sector's top-quintile cutoff of 17.8%.
- 3Net margin of 19.3% indicates strong profitability.
- 4Consistent profitability over the last five years.
Concerns
6- 1 of 22.7 suggests high valuation relative to earnings growth.
- 2Revenue CAGR of 2.64% indicates slow growth in a competitive sector.
- 3Debt/Equity ratio of 2.83 is high, indicating reliance on .
- 4Current ratio of 1.19 is below the preferred threshold of 1.5.
Price history
$279+22.5%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Illinois Tool Works operates through seven segments, providing products like automotive components, food equipment, and welding tools. The company earns $16.04B in revenue with a net margin of 19.3%, indicating efficient operations. The stands at 26.4%, reflecting strong profitability across its diverse industrial segments. Unit economics are robust with a 44.1% , placing it in the top quintile within its sector.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 23, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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