Valuation Limits Upside for Illinois Tool Works (ITW), Goldman Says

Illinois Tool Works Inc. (NYSE:ITW) is included among the 14 Best Dividend Growth Stocks to Buy and Hold in 2026.

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On December 16, Goldman Sachs downgraded Illinois Tool Works Inc. (NYSE:ITW) to Sell from Neutral and cut its price target to $230 from $258. The analyst described the company as well-run but said the shares offer limited upside from current levels. Goldman also sees modest downside risk to earnings estimates and does not expect the stock’s valuation multiple to re-rate versus peers, given the pace of earnings improvement.

In its third-quarter 2025 results, Illinois Tool Works Inc. (NYSE:ITW) reported a record operating margin of 27.4%, up 90 basis points. Enterprise initiatives contributed 140 basis points to that performance. Operating cash flow reached $1.0 billion, while free cash flow increased 15% to $904 million. That translated into a 110% conversion rate relative to net income. Management highlighted continued progress on strategic growth priorities and reaffirmed its focus on delivering above-market organic growth through customer-backed innovation. The company said it remains on track to meet its 2030 performance goals, including a customer-backed innovation yield exceeding 3%.

For FY25, Illinois Tool maintained operating margin guidance of 26% to 27%. Enterprise initiatives are expected to add about 125 basis points for the full year. Management also reiterated confidence in reaching the $10.45 midpoint of its EPS target.

Illinois Tool Works Inc. (NYSE:ITW) is a global industrial manufacturer with a broad portfolio of value-added products, including engineered fasteners, equipment, and specialty components.

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