Illinois Tool Works Inc.

Illinois Tool Works Inc. is an American diversified industrial manufacturer that produces a broad range of engineered fasteners, components, equipment, and consumables through 88 decentralized divisions operating in 49 countries, generating $16.0 billion in revenue in fiscal 2025. Founded in 1912 as a gear-cutting shop in Chicago, ITW has evolved into one of the world's most profitable multi-industrials, not by chasing scale or secular growth trends, but by perfecting a proprietary operating philosophy — the ITW Business Model — that systematically extracts superior margins and returns from a deliberately unglamorous portfolio of niche industrial businesses.

This is a story about a company whose competitive advantage is not what it makes, but how it operates. ITW's 80/20 front-to-back methodology, refined over four decades, is a relentless margin-expansion engine that has pushed operating margins from the mid-teens to 26.3% over the past dozen years, with a stated goal of reaching 30% by 2030. At the same time, the company is now attempting something it has historically struggled to do: grow. The next phase of the enterprise strategy, running through 2030, makes achieving 4%+ high-quality organic growth the company's highest priority, driven by a revamped innovation framework called customer-back innovation that contributed 2.4% to revenue in FY2025.

The file turns on a single question: whether ITW can build a durable organic growth engine on top of its margin machine without compromising the discipline that made it great. A company that has spent decades optimizing for profitability is now asking investors to believe it can also optimize for growth — and the answer will determine whether the current ~23x earnings multiple represents fair value for a steady compounder, or an overpayment for a business whose best margin days may be behind it.