Valued at a market cap of around $82 billion, Glenview, Illinois-based Illinois Tool Works Inc. (ITW) is a global manufacturer of a broad range of industrial products and equipment. Operating through seven key segments, ITW serves diverse markets, including automotive, construction, food equipment, and electronics, with innovative and specialized solutions.

Shares of the equipment manufacturer have underperformed the broader market over the past 52 weeks. ITW has risen 15.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 32.6%. In 2024, shares of ITW are up nearly 6%, compared to SPX’s 26.5% gain on a YTD basis.

Focusing more closely, Illinois Tool Works has also lagged behind the Industrial Select Sector SPDR Fund’s (XLI) nearly 36% return over the past 52 weeks and a 26.3% YTD gain. 

Despite the revenue miss, shares of ITW rose 3.2% on Oct. 30 due to stronger-than-expected adjusted EPS of $2.65 surpassing the consensus estimate. The company’s operating margin remained stable at 26.5%, driven by enterprise initiatives contributing 130 basis points to the margin. ITW also raised its 2024 earnings guidance to $11.63 per share – $11.73 per share. The company’s free cash flow outlook, expected to be approximately 100% of net income, and its plan to repurchase $1.5 billion in shares bolstered investor confidence.

For the current fiscal year, ending in December, analysts expect ITW’s EPS to grow 3.6% year-over-year to $10.13. The company's earnings surprise history is promising. It topped the consensus estimates in the last four quarters.

Among the 17 analysts covering the stock, the consensus rating is a “Hold.” That’s based on three “Strong Buy” ratings, eight “Holds,” one “Moderate Sell,” and five “Strong Sells.”

On Nov. 1, Barclays raised Illinois Tool Works' price target to $230 while maintaining an “Underweight” rating, citing improved performance on Enterprise Initiatives and potential recovery in CBI.

As of writing, ITW is trading above the mean price target of $261.33. The Street-high price target of $312, implies a potential upside of 12.4% from the current price levels.