Howmet Aerospace Inc. (HWM) and Illinois Tool Works Inc. (ITW) are two prominent players in the industrial machinery sector, each driving innovation in engineered solutions and manufacturing equipment. Both companies have a strong footprint in diverse markets, from aerospace components to automotive and construction products, making their strategies and growth prospects highly relevant for investors. In this article, I will analyze these companies to help you identify the more compelling investment opportunity.
Table of contents
Companies Overview
I will begin the comparison between Howmet Aerospace and Illinois Tool Works by providing an overview of these two companies and their main differences.
Howmet Aerospace Overview
Howmet Aerospace Inc. provides advanced engineered solutions primarily for aerospace and transportation industries. Operating globally, it focuses on four segments: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels. The company supplies components such as airfoils, fastening systems, titanium and aluminum forgings, and forged aluminum wheels. Founded in 1888, Howmet is headquartered in Pittsburgh, PA, with a market cap of $88B.
Illinois Tool Works Overview
Illinois Tool Works Inc. manufactures and sells a broad range of industrial products through seven segments, including Automotive OEM, Food Equipment, Welding, and Construction Products. It serves diverse markets such as automotive, food equipment, and construction, distributing products directly and via independent distributors. Founded in 1912 and based in Glenview, IL, ITW has a market cap of $74.5B and employs approximately 44,000 people.
Key similarities and differences
Both companies operate in the industrial machinery sector with a global footprint and diversified product lines. Howmet Aerospace specializes in engineered components for aerospace and transportation, emphasizing forged and machined parts, while Illinois Tool Works offers a wider industrial product range across seven segments, including adhesives, welding equipment, and food service machinery. ITW has a larger workforce and a broader market exposure compared to Howmet’s focused aerospace and transportation niche.
Income Statement Comparison
This table compares the key income statement figures for Howmet Aerospace Inc. and Illinois Tool Works Inc. for the fiscal year 2024, providing a snapshot of their recent financial performance.
| Metric | Howmet Aerospace Inc. (HWM) | Illinois Tool Works Inc. (ITW) |
|---|---|---|
| Market Cap | 88B | 74.5B |
| Revenue | 7.43B | 15.9B |
| EBITDA | 1.84B | 5.11B |
| EBIT | 1.57B | 4.71B |
| Net Income | 1.16B | 3.49B |
| EPS | 2.83 | 11.75 |
| Fiscal Year | 2024 | 2024 |
Income Statement Interpretations
Howmet Aerospace Inc.
Howmet Aerospace’s revenue steadily increased from 5.3B in 2020 to 7.4B in 2024, with net income rising sharply from 209M to 1.16B. Margins improved markedly, with a gross margin of 27.6% and net margin of 15.6% in 2024, reflecting enhanced operational efficiency. The recent year showed strong growth in revenue and profitability, with net income growth accelerating by 34.9%.
Illinois Tool Works Inc.
Illinois Tool Works saw revenue grow from 12.6B in 2020 to 15.9B in 2024, though revenue declined slightly by 1.3% in the last year. Net income climbed from 2.1B to 3.5B over five years, with a net margin reaching 21.9% in 2024. Margins remain robust, and the company exhibited favorable EBIT and EPS growth despite the recent dip in revenue.
Which one has the stronger fundamentals?
Howmet Aerospace demonstrates exceptionally strong income growth and margin expansion, with 100% favorable income statement evaluations. Illinois Tool Works maintains higher absolute margins and net income, but its recent revenue contraction and mixed growth metrics temper its profile. Both show favorable fundamentals, though Howmet’s rapid earnings acceleration contrasts with Illinois Tool Works’ steadier performance.
Financial Ratios Comparison
The table below presents a side-by-side comparison of key financial ratios for Howmet Aerospace Inc. (HWM) and Illinois Tool Works Inc. (ITW) based on their latest fiscal year data from 2024.
| Ratios | Howmet Aerospace Inc. (HWM) | Illinois Tool Works Inc. (ITW) |
|---|---|---|
| ROE | 25.4% | 105.2% |
| ROIC | 15.5% | 27.2% |
| P/E | 38.6 | 21.6 |
| P/B | 9.80 | 22.7 |
| Current Ratio | 2.17 | 1.36 |
| Quick Ratio | 0.98 | 0.99 |
| D/E | 0.76 | 2.44 |
| Debt-to-Assets | 33.0% | 53.6% |
| Interest Coverage | 9.19 | 15.1 |
| Asset Turnover | 0.71 | 1.06 |
| Fixed Asset Turnover | 2.92 | 6.91 |
| Payout Ratio | 9.4% | 48.6% |
| Dividend Yield | 0.24% | 2.25% |
Interpretation of the Ratios
Howmet Aerospace Inc.
Howmet Aerospace shows mostly favorable profitability ratios, including a solid 25.36% return on equity and 15.49% return on invested capital, indicating efficient use of capital. However, valuation multiples such as a high PE of 38.63 and PB of 9.8 are unfavorable, suggesting a potentially expensive stock. The company pays a modest dividend with a low yield of 0.24%, reflecting cautious shareholder returns.
Illinois Tool Works Inc.
Illinois Tool Works demonstrates strong financial health with favorable net margin at 21.94%, an exceptionally high ROE of 105.16%, and robust returns on invested capital at 27.19%. The company’s debt metrics raise some concerns, with a debt-to-equity ratio of 2.44 and debt-to-assets at 53.61%, both unfavorable. ITW offers a healthy dividend yield of 2.25%, supported by consistent payouts and strong cash flow coverage.
Which one has the best ratios?
Both companies present slightly favorable global ratio evaluations, but Illinois Tool Works outperforms Howmet Aerospace in profitability, asset turnover, and dividend yield. Conversely, Howmet Aerospace maintains better leverage and liquidity ratios. The choice between them depends on prioritizing stronger returns and dividends versus more conservative debt and liquidity profiles.
Strategic Positioning
This section compares the strategic positioning of Howmet Aerospace Inc. and Illinois Tool Works Inc., focusing on Market position, Key segments, and Exposure to technological disruption:
Howmet Aerospace Inc.
- Leading aerospace and transportation machinery provider facing industrial competition.
- Key segments include Engine Products, Fastening Systems, and Engineered Structures.
- Exposure mainly in aerospace and transportation industries with traditional manufacturing.
Illinois Tool Works Inc.
- Diversified industrial machinery manufacturer with broad global reach.
- Operates seven segments including Automotive OEM, Food Equipment, Welding, and Specialty Products.
- Exposure spans multiple industries including automotive, food equipment, and electronics, with varied technological impact.
Howmet Aerospace Inc. vs Illinois Tool Works Inc. Positioning
Howmet Aerospace focuses on aerospace and transportation segments, showing a more concentrated approach. Illinois Tool Works operates a diversified portfolio across seven segments, potentially reducing dependency on a single market but increasing complexity.
Which has the best competitive advantage?
Both companies demonstrate a very favorable moat with growing ROIC and sustained value creation. Illinois Tool Works shows a higher ROIC premium over WACC, indicating a stronger competitive advantage based on the provided MOAT evaluation.
Stock Comparison
The past year has seen Howmet Aerospace Inc. (HWM) exhibit a strong bullish trend with significant price gains despite deceleration, while Illinois Tool Works Inc. (ITW) showed marginal price appreciation with accelerating momentum.
Trend Analysis
Howmet Aerospace Inc. posted a 248.15% price increase over the past 12 months, indicating a strong bullish trend with decelerating acceleration and a high volatility level (std deviation 47.01). The stock reached a high of 218.71 and a low of 62.82.
Illinois Tool Works Inc. recorded a 0.23% price increase over the same period, resulting in a neutral trend despite accelerating momentum and moderate volatility (std deviation 10.65). The stock’s price ranged between 225.57 and 277.52.
Comparing both stocks, Howmet Aerospace delivered the highest market performance over the past year, significantly outperforming Illinois Tool Works in price appreciation.
Target Prices
The current analyst consensus suggests bullish outlooks for both Howmet Aerospace Inc. and Illinois Tool Works Inc.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Howmet Aerospace Inc. | 258 | 205 | 231.75 |
| Illinois Tool Works Inc. | 275 | 230 | 254 |
Analysts expect Howmet Aerospace’s price to rise modestly above the current 218.85 USD, while Illinois Tool Works is valued closely to its current 254.51 USD, indicating stable growth potential.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Howmet Aerospace Inc. (HWM) and Illinois Tool Works Inc. (ITW):
Rating Comparison
HWM Rating
- Rating: B, classified as Very Favorable by analysts.
- Discounted Cash Flow Score: Moderate at 2, indicating average valuation based on future cash flow.
- ROE Score: Very Favorable at 5, demonstrating strong profit generation from equity.
- ROA Score: Very Favorable at 5, indicating efficient asset utilization.
- Debt To Equity Score: Moderate at 2, suggesting moderate financial risk.
- Overall Score: Moderate at 3, reflecting balanced financial standing.
ITW Rating
- Rating: B, classified as Very Favorable by analysts.
- Discounted Cash Flow Score: Moderate at 3, showing slightly better valuation assessment than HWM.
- ROE Score: Very Favorable at 5, equally strong in generating profit from shareholders’ equity.
- ROA Score: Very Favorable at 5, matching HWM in effective asset utilization.
- Debt To Equity Score: Very Unfavorable at 1, indicating higher financial risk due to debt levels.
- Overall Score: Moderate at 3, also showing a balanced financial position overall.
Which one is the best rated?
Both HWM and ITW hold the same overall rating of B with a moderate overall score of 3. HWM shows a lower debt-to-equity risk score, while ITW has a slightly better discounted cash flow score. Based strictly on these provided metrics, neither company clearly outperforms the other.
Scores Comparison
The scores comparison between Howmet Aerospace Inc. (HWM) and Illinois Tool Works Inc. (ITW) is as follows:
HWM Scores
- Altman Z-Score: 10.43, indicating a safe zone with low bankruptcy risk.
- Piotroski Score: 9, classified as very strong financial health.
ITW Scores
- Altman Z-Score: 7.93, also in the safe zone, showing financial stability.
- Piotroski Score: 7, representing strong but not very strong financial health.
Which company has the best scores?
Howmet Aerospace (HWM) has higher Altman Z-Score and Piotroski Score values compared to Illinois Tool Works (ITW). Therefore, based strictly on these scores, HWM shows stronger financial health and lower bankruptcy risk.
Grades Comparison
Here is a comparison of the recent grades assigned to Howmet Aerospace Inc. and Illinois Tool Works Inc.:
Howmet Aerospace Inc. Grades
The following table summarizes the latest grades from key financial institutions for Howmet Aerospace Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| B of A Securities | Maintain | Buy | 2025-11-14 |
| JP Morgan | Maintain | Overweight | 2025-11-10 |
| Goldman Sachs | Maintain | Buy | 2025-11-03 |
| BTIG | Maintain | Buy | 2025-11-03 |
| UBS | Maintain | Neutral | 2025-10-31 |
| RBC Capital | Maintain | Outperform | 2025-10-31 |
| TD Cowen | Maintain | Buy | 2025-10-31 |
| Truist Securities | Maintain | Buy | 2025-10-15 |
| Susquehanna | Maintain | Positive | 2025-10-09 |
| B of A Securities | Maintain | Buy | 2025-08-05 |
Howmet Aerospace’s grades predominantly indicate a strong buy and outperform stance with consistent maintenance of positive ratings.
Illinois Tool Works Inc. Grades
The following table shows recent grades provided by financial institutions for Illinois Tool Works Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Wells Fargo | Maintain | Underweight | 2026-01-07 |
| Goldman Sachs | Downgrade | Sell | 2025-12-16 |
| B of A Securities | Upgrade | Neutral | 2025-11-18 |
| Barclays | Maintain | Underweight | 2025-10-27 |
| Truist Securities | Maintain | Hold | 2025-10-27 |
| Wells Fargo | Maintain | Underweight | 2025-10-27 |
| Truist Securities | Maintain | Hold | 2025-10-08 |
| Barclays | Downgrade | Underweight | 2025-08-14 |
| Barclays | Maintain | Equal Weight | 2025-08-04 |
| UBS | Maintain | Neutral | 2025-07-31 |
Illinois Tool Works shows a mixed to negative trend with several underweight and sell ratings, along with hold and neutral grades.
Which company has the best grades?
Howmet Aerospace Inc. has received significantly better grades, with a majority of buy and outperform ratings, indicating stronger analyst confidence compared to Illinois Tool Works Inc., which has more cautious and negative ratings. This divergence may influence investors’ perception of growth and risk profiles between the two companies.
Strengths and Weaknesses
Below is a comparative overview of key strengths and weaknesses of Howmet Aerospace Inc. (HWM) and Illinois Tool Works Inc. (ITW) based on their recent financial and operational data.
| Criterion | Howmet Aerospace Inc. (HWM) | Illinois Tool Works Inc. (ITW) |
|---|---|---|
| Diversification | Moderate: Focused mainly on Engine Products, Fastening, Structure, and Wheel Systems segments. | High: Broad portfolio including Automotive, Construction, Food Equipment, Specialty Products, and more. |
| Profitability | Solid profitability with a net margin of 15.55% and ROIC at 15.49%. | Superior profitability: net margin 21.94%, ROIC 27.19%, and exceptionally high ROE at 105.16%. |
| Innovation | Growing ROIC trend (+86.1%) indicates improving operational efficiency and competitive advantage. | Also strong with a growing ROIC trend (+62.4%) and durable competitive advantages across diverse segments. |
| Global presence | Strong aerospace focus likely with international customers but less diversified globally than ITW. | Extensive global reach with multiple industrial segments, enhancing resilience and market access. |
| Market Share | Leading position in aerospace components, but narrower market focus. | Significant market share across varied industrial sectors, leveraging scale and product diversity. |
Key takeaways: Both companies demonstrate very favorable economic moats with growing profitability. ITW stands out for its broad diversification and higher profitability metrics, while HWM shows strong growth and operational focus in aerospace components. Investors should weigh ITW’s diversified stability against HWM’s specialized growth potential.
Risk Analysis
Below is a comparative table of key risks for Howmet Aerospace Inc. (HWM) and Illinois Tool Works Inc. (ITW) based on the most recent 2024 data:
| Metric | Howmet Aerospace Inc. (HWM) | Illinois Tool Works Inc. (ITW) |
|---|---|---|
| Market Risk | Beta 1.29 (moderate volatility) | Beta 1.17 (moderate volatility) |
| Debt level | Debt/Equity 0.76 (moderate), Debt to Assets 33% | Debt/Equity 2.44 (high), Debt to Assets 54% (high) |
| Regulatory Risk | Exposure to aerospace and transportation regulations globally | Diverse industrial segments with compliance in automotive, food, and construction sectors |
| Operational Risk | Complex multi-segment operations in aerospace and transportation | Broad product range across seven segments, potential supply chain complexity |
| Environmental Risk | Manufacturing processes with potential emissions and resource use | Industrial manufacturing with environmental compliance demands |
| Geopolitical Risk | Global operations including China, Europe, North America | Global distribution, exposed to trade policies and tariffs |
The most significant risks are ITW’s high debt levels, which increase financial vulnerability, and Howmet’s exposure to aerospace market cyclicality. Both companies have moderate market risk and operate in heavily regulated industries, requiring careful monitoring of operational and geopolitical factors.
Which Stock to Choose?
Howmet Aerospace Inc. (HWM) shows strong income growth with a 41.3% revenue increase over 2020-2024 and a 447% rise in net income. Its financial ratios are slightly favorable, featuring a 25.4% ROE and a net margin of 15.55%. Debt levels appear moderate, with a net debt to EBITDA of 1.58, and the company holds a very favorable B rating.
Illinois Tool Works Inc. (ITW) displays steady income with a 26.4% revenue growth over the same period and a 65.4% increase in net income. Its ratios are more favorable overall, including a 105.2% ROE and a 21.94% net margin. However, ITW carries higher leverage, reflected in a net debt to EBITDA of 1.40 and an unfavorable debt-to-equity score, yet it shares the same very favorable B rating.
For investors prioritizing robust profitability and income growth with moderate leverage, HWM might appear attractive due to its very favorable moat and improving financials. Conversely, ITW’s stronger profitability ratios and durable competitive advantage could appeal to those seeking a company with historically higher returns and a solid rating but with higher debt risk.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Howmet Aerospace Inc. and Illinois Tool Works Inc. to enhance your investment decisions:
