Illinois Tool Tops Q2 Earnings & Revenue Estimates, Raises 2026 View

ITW’s Segmental Performance

Test & Measurement and Electronics’ revenues were $769 million, up 12.1% year over year. Revenues from Automotive Original Equipment Manufacturer increased 1.3% year over year to $857 million. Our estimate for segmental revenues was $866 million.

Food Equipment generated revenues of $692 million, up 1.6% year over year. Our estimate for segmental revenues was $695 million. Welding revenues were $549 million, up 14.7% year over year.

Construction Products’ revenues were up 4.3% year over year to $494 million. Our estimate for segmental revenues was $482 million. Revenues of $468 million from Specialty Products reflected an increase of 3% year over year. Our estimate for segmental revenues was $465 million. Polymers & Fluids’ revenues of $476 million increased 8.8% year over year. Our estimate for segmental revenues was $451 million.

Illinois Tool’s Margin Profile

Illinois Tool’s cost of sales increased 5.8% year over year to $2.40 billion. Selling, administrative and research and development expenses increased 6.1% year over year to $735 million. The operating margin was 26.7%, up 40 basis points (bps) from the year-ago quarter. Enterprise initiatives contributed 120 bps to the operating margin.

ITW’s Balance Sheet and Cash Flow

At the end of the second quarter, Illinois Tool had cash and equivalents of $839 million compared with $851 million at the end of December 2025. Long-term debt was $6.55 billion compared with $6.68 billion at the end of December 2025.

In the second quarter of 2026, Illinois Tool generated net cash of $723 million from operating activities, reflecting an increase of 31.5% from the year-ago number. Capital spending on the purchase of plant and equipment was $92 million, down 8.9% year over year. Free cash flow was $631 million, up 40.5% year over year.

Illinois Tool’s 2026 Guidance

Illinois Tool raised its full-year 2026 financial guidance. ITW now expects earnings to be in the range of $11.35-$11.55 per share compared with $11.10-$11.50 expected earlier. Revenues are expected to increase 4-5% while organic revenues are anticipated to rise 3-4%. Operating margin is expected to be 26.5–27.5%. Enterprise initiatives are expected to contribute more than 100 bps to the operating margin.

Illinois Tool projects free cash flow to be more than 100% of its net income. The company expects to repurchase about $1.5 billion worth of shares. The effective tax rate is expected to be 23-24%.

Zacks Rank and Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are discussed below:

Applied Industrial Technologies AIT carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Applied Industrial’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 4.0%.  In the past 60 days, the Zacks Consensus Estimate for Applied Industrial’s fiscal 2026 bottom line has inched up 0.1%.

Dover Corporation DOV presently carries a Zacks Rank of 2. Dover’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 1.8%. In the past 60 days, the Zacks Consensus Estimate for DOV’s 2026 earnings has increased 0.5%.

Generac Holdings GNRC currently carries a Zacks Rank of 2. Generac Holdings’ earnings topped the consensus estimate twice and missed on the other two occasions in the trailing four quarters. The average earnings surprise was 7.4%. In the past 60 days, the Zacks Consensus Estimate for GNRC’s 2026 earnings has been stable.

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