Illinois Tool Works Receives High Ratings from Investment Models

Illinois Tool Works excels with an 86% rating under Warren Buffett's model, indicating solid earnings predictability and low debt. However, it failed in free cash flow metrics, which could weigh on investor sentiment and stock performance.

Date: 10-02-2025

AI Rating: 6

Strong Performance Indicators

Illinois Tool Works Inc (ITW) has been rated 86% according to the Patient Investor model based on Warren Buffett's strategy. This high rating suggests the company exhibits strong fundamentals and reasonable valuations, making it attractive to investors interested in long-term profitability.

The report shows that ITW has successfully passed several critical evaluations, including Earnings Predictability, Debt Service, and Return on Equity, all rated as 'PASS.' This reflects a steady operational performance and a sound financial structure that is appealing to conservative investors.

Additionally, the company has demonstrated beneficial practices in areas like Share Repurchase and Retained Earnings Use, contributing to the overall positive outlook.

Areas of Concern

Despite the positives, the report highlights a significant shortcoming in Free Cash Flow, which has been marked as a 'FAIL.' This aspect could lead to concerns regarding liquidity and the company's ability to sustain operations or invest in growth opportunities. Potential investors might perceive this weakness as a red flag, potentially impacting stock prices.

A solid rating of 86%, coupled with inherent strengths in debt management and profitability metrics, contrasts against the caution advised due to poor free cash flow. Investors should weigh these factors carefully when considering their positions in ITW.

Stocks: ITW