ITW Profit Margins
Gross, Operating & Net Margin Analysis for Illinois Tool Works Inc
Margin Quality
Excellent
Current Profit Margins
Gross Margin
52.9%
$8.49B gross profit
Operating Margin
26.3%
$4.22B operating income
Net Profit Margin
19.1%
$3.07B net income
5-Year Margin Trends
What Margins Indicate About ITW
Business Quality
High gross margins above 50% suggest Illinois Tool Works Inc has strong pricing power and competitive advantages that allow premium pricing.
Operational Efficiency
Expanding operating margins show Illinois Tool Works Inc is improving operational leverage and cost management.
Profitability
Net margins above 15% demonstrate excellent profitability and suggest strong competitive positioning.
Investment Implications
Mixed margin trends require deeper analysis to understand underlying business dynamics and sustainability.
Understanding Profit Margins
Gross Margin
(Revenue - Cost of Goods Sold) / Revenue. Measures pricing power and production efficiency before operating expenses.
Operating Margin
Operating Income / Revenue. Shows profitability from core operations after all operating expenses but before interest and taxes.
Net Profit Margin
Net Income / Revenue. The bottom line - shows how much profit the company keeps from each dollar of revenue after all expenses.
Analyze ITW Profitability
Get complete financial analysis with profitability trends, ROE, ROIC, and more
Frequently Asked Questions
What is ITW's profit margin?
ITW (Illinois Tool Works Inc) has a net profit margin of 19.1%, meaning the company keeps $0.19109947643979058 in profit for every dollar of revenue. This represents a change from the previous year's net margin of 21.9%.
What is ITW's gross margin?
ITW's gross margin is 52.9%. Gross margin measures the percentage of revenue remaining after subtracting the cost of goods sold. A high gross margin like this indicates strong pricing power and efficient production.
What is ITW's operating margin?
ITW has an operating margin of 26.3%. Operating margin shows profitability after operating expenses but before interest and taxes. The 26.3% year-over-year improvement suggests better operational efficiency.
Are ITW's profit margins good?
ITW's margins are considered excellent. With a gross margin of 52.9% and net margin of 19.1%, Illinois Tool Works Inc demonstrates strong pricing power and operational efficiency.
How do profit margins affect ITW stock?
Profit margins are a key indicator of ITW's business quality and competitive position. High margins suggest strong competitive advantages and pricing power, which typically support premium valuations. Expanding margins often lead to stock price appreciation, while contracting margins can signal competitive pressures.
What drives ITW's profit margins?
ITW's profit margins are influenced by several factors: pricing power vs competitors, operational efficiency, scale advantages, input costs (materials, labor), Machinery-specific dynamics, and management execution. The significant expansion in gross margin suggests changes in these underlying drivers.
Disclaimer: Margin analysis is based on reported financial statements and should be compared to industry peers for context. Different sectors have structurally different margin profiles. This information is for educational purposes only and should not be considered financial advice.