Choosing the right industrial machinery stock requires careful analysis of market positioning and innovation strategies. Illinois Tool Works Inc. (ITW) and Nordson Corporation (NDSN) are two prominent players in this sector, both delivering advanced solutions but with distinct operational scopes. ITW’s diversified segments contrast with Nordson’s precision dispensing technologies. This article will guide you through their strengths to identify which company offers the most compelling investment opportunity in 2026.
Table of contents
Companies Overview
I will begin the comparison between Illinois Tool Works Inc. and Nordson Corporation by providing an overview of these two companies and their main differences.
Illinois Tool Works Inc. Overview
Illinois Tool Works Inc. manufactures and sells industrial products and equipment worldwide, operating through seven diverse segments including Automotive OEM, Food Equipment, and Welding. It serves various end markets such as automotive, construction, and general industrial sectors. Founded in 1912 and based in Glenview, Illinois, ITW holds a strong position in the Industrial Machinery industry with a broad product portfolio and a global distribution network.
Nordson Corporation Overview
Nordson Corporation engineers and markets systems for dispensing, applying, and controlling adhesives, coatings, and other fluids. It operates two main segments: Industrial Precision Solutions and Advanced Technology Solutions, offering products for packaging, assembly, and semiconductor industries. Founded in 1935 and headquartered in Westlake, Ohio, Nordson maintains a focused niche within the Industrial Machinery sector, emphasizing precision dispensing technologies and advanced fluid control solutions.
Key similarities and differences
Both ITW and Nordson operate in the Industrial Machinery industry and serve global markets with specialized equipment. ITW’s business model is diversified across multiple industrial segments, including automotive and construction, while Nordson concentrates on precision fluid dispensing and coating technologies. Additionally, ITW employs a larger workforce and has a significantly higher market capitalization compared to Nordson, reflecting differences in scale and product breadth.
Income Statement Comparison
The table below presents a side-by-side comparison of the most recent full fiscal year income statement metrics for Illinois Tool Works Inc. and Nordson Corporation.
| Metric | Illinois Tool Works Inc. (ITW) | Nordson Corporation (NDSN) |
|---|---|---|
| Market Cap | 74.7B | 14.6B |
| Revenue | 15.9B | 2.8B |
| EBITDA | 5.11B | 712M |
| EBIT | 4.71B | 561M |
| Net Income | 3.49B | 484M |
| EPS | 11.75 | 8.56 |
| Fiscal Year | 2024 | 2025 |
Income Statement Interpretations
Illinois Tool Works Inc.
Illinois Tool Works Inc. exhibited consistent revenue growth of 26.44% over 2020-2024, with net income rising 65.39% in the same period. Margins improved, particularly net margin growth of 30.81%, supported by a favorable gross margin of 43.65%. In 2024, revenue slightly declined by 1.3%, yet EBIT and net income margins expanded, signaling improved profitability.
Nordson Corporation
Nordson Corporation showed steady revenue growth of 18.18% from 2021 to 2025, with net income increasing 6.63%. The gross margin remains strong at 55.16%, but EBIT margin at 20.1% is lower than ITW’s. The latest year saw neutral revenue growth of 3.78%, but EBIT declined by 16.79%, reflecting margin pressures despite a modest EPS increase of 4.93%.
Which one has the stronger fundamentals?
Illinois Tool Works stands out with higher margin expansions and stronger net income growth over the period. While Nordson maintains a superior gross margin, its recent EBIT decline and net margin contraction raise concerns. ITW’s consistent profitability improvements and broader favorable income statement metrics suggest comparatively stronger fundamentals based solely on the income statement data.
Financial Ratios Comparison
The table below presents a side-by-side comparison of key financial ratios for Illinois Tool Works Inc. (ITW) and Nordson Corporation (NDSN) based on their most recent fiscal year data.
| Ratios | Illinois Tool Works Inc. (ITW) | Nordson Corporation (NDSN) |
|---|---|---|
| ROE | 105.2% | 15.9% |
| ROIC | 27.2% | 10.5% |
| P/E | 21.6 | 27.1 |
| P/B | 22.7 | 4.31 |
| Current Ratio | 1.36 | 1.64 |
| Quick Ratio | 0.99 | 1.05 |
| D/E | 2.44 | 0.69 |
| Debt-to-Assets | 53.6% | 35.4% |
| Interest Coverage | 15.1 | 7.04 |
| Asset Turnover | 1.06 | 0.47 |
| Fixed Asset Turnover | 6.91 | 4.70 |
| Payout ratio | 48.6% | 37.0% |
| Dividend yield | 2.25% | 1.36% |
Interpretation of the Ratios
Illinois Tool Works Inc.
Illinois Tool Works shows a strong profitability profile with a net margin of 21.94%, ROE exceeding 105%, and ROIC at 27.19%, all favorable indicators. However, concerns arise with a high debt-to-equity ratio of 2.44 and a debt-to-assets ratio above 53%, which are unfavorable. The company pays dividends with a healthy yield of 2.25%, supported by free cash flow coverage, though investors should watch leverage levels.
Nordson Corporation
Nordson Corporation displays favorable net margin (17.35%), ROE (15.92%), and ROIC (10.49%), yet faces weaknesses in asset turnover (0.47) and valuation measures (PE and PB ratios unfavorable). Its current and quick ratios are favorable, highlighting liquidity strength. Nordson pays dividends with a moderate 1.36% yield, balancing shareholder returns with a conservative debt profile (debt/equity 0.69).
Which one has the best ratios?
Both companies have a similarly balanced ratio profile with 50% favorable and 21.43% unfavorable metrics, resulting in a slightly favorable global evaluation. Illinois Tool Works excels in profitability but carries higher leverage risk, while Nordson boasts stronger liquidity and lower financial risk but weaker asset utilization. The best ratio depends on investor priorities between profitability and financial stability.
Strategic Positioning
This section compares the strategic positioning of Illinois Tool Works Inc. and Nordson Corporation, including their market position, key segments, and exposure to technological disruption:
Illinois Tool Works Inc.
- Large market cap of 74.7B facing industrial machinery competitors with moderate beta of 1.17
- Diverse segments: Automotive OEM, Food Equipment, Welding, Polymers & Fluids, Construction, Specialty Products, Test & Measurement
- Exposure to disruption through electronics, test and measurement, and polymers in multiple segments
Nordson Corporation
- Smaller market cap of 14.6B, moderate beta of 1.03 in industrial machinery sector
- Focused segments: Industrial Precision Solutions, Advanced Technology Systems, Medical and Fluid Solutions
- Exposure via advanced dispensing, coating, curing, and plasma treatment technologies in precision applications
Illinois Tool Works Inc. vs Nordson Corporation Positioning
Illinois Tool Works adopts a diversified approach with seven distinct segments spanning various industrial markets, offering broad revenue streams. Nordson concentrates on precision dispensing and coating technologies with specialized applications, resulting in a more focused business model.
Which has the best competitive advantage?
Illinois Tool Works demonstrates a very favorable moat with growing ROIC significantly above WACC, indicating a durable competitive advantage. Nordson also creates value but shows declining ROIC, reflecting a slightly favorable moat and less durable profitability.
Stock Comparison
The stock price movements of Illinois Tool Works Inc. (ITW) and Nordson Corporation (NDSN) over the past year reveal contrasting dynamics, with ITW showing a slight overall gain and NDSN experiencing a moderate decline, both ending the recent quarter with accelerated upward momentum.
Trend Analysis
Illinois Tool Works Inc. (ITW) exhibited a bullish trend over the past 12 months with a modest 0.47% price increase and accelerating momentum, reaching a high of 277.52 and a low of 225.57.
Nordson Corporation (NDSN) showed a bearish trend over the same period with a -1.08% price decline, despite accelerating momentum and a wider price range from 176.73 to 278.89.
Comparing the two, ITW delivered the highest market performance over the year with a positive price change, while NDSN trended downward despite recent strong gains.
Target Prices
The consensus analyst target prices indicate positive expectations for both Illinois Tool Works Inc. and Nordson Corporation.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Illinois Tool Works Inc. | 275 | 230 | 254 |
| Nordson Corporation | 295 | 240 | 274.17 |
Analysts expect Illinois Tool Works’ price to remain near the current level of 255, while Nordson’s consensus target of 274.17 suggests potential upside from its current price of 261.22.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Illinois Tool Works Inc. and Nordson Corporation:
Rating Comparison
Illinois Tool Works Inc. Rating
- Rating: B, classified as Very Favorable by analysts.
- Discounted Cash Flow Score: 3, indicating a moderate valuation outlook.
- ROE Score: 5, reflecting a very favorable efficiency in generating profit from equity.
- ROA Score: 5, very favorable in asset utilization to generate earnings.
- Debt To Equity Score: 1, reflecting very unfavorable financial risk level.
- Overall Score: 3, representing a moderate overall financial standing.
Nordson Corporation Rating
- Rating: B, also classified as Very Favorable by analysts.
- Discounted Cash Flow Score: 3, showing a moderate valuation outlook.
- ROE Score: 4, indicating favorable profit generation efficiency.
- ROA Score: 4, favorable asset utilization performance.
- Debt To Equity Score: 2, showing a moderate financial risk profile.
- Overall Score: 3, indicating a moderate overall financial standing.
Which one is the best rated?
Both companies share the same overall rating and score, but Illinois Tool Works Inc. shows stronger profitability metrics with higher ROE and ROA scores, while Nordson Corporation has a better debt-to-equity score, indicating lower financial risk.
Scores Comparison
Here is a comparison of the financial scores for Illinois Tool Works Inc. and Nordson Corporation:
ITW Scores
- Altman Z-Score: 7.93, indicating a safe zone with low bankruptcy risk.
- Piotroski Score: 7, showing strong financial health and value potential.
NDSN Scores
- Altman Z-Score: 4.90, indicating a safe zone with low bankruptcy risk.
- Piotroski Score: 7, showing strong financial health and value potential.
Which company has the best scores?
Both ITW and NDSN are in the safe zone by Altman Z-Score and share the same strong Piotroski Score of 7. ITW has a higher Altman Z-Score, suggesting marginally better financial stability based on this metric alone.
Grades Comparison
Here is a comparison of the latest available grading data from reputable financial institutions for Illinois Tool Works Inc. and Nordson Corporation:
Illinois Tool Works Inc. Grades
The table below presents recent grades for Illinois Tool Works Inc. from established grading companies.
| 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 |
Overall, the grades for Illinois Tool Works indicate a predominantly cautious stance, with multiple underweight and hold ratings and a recent downgrade to sell by Goldman Sachs.
Nordson Corporation Grades
Below is a summary of recent grades for Nordson Corporation from recognized grading firms.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| DA Davidson | Maintain | Buy | 2025-12-12 |
| Baird | Maintain | Neutral | 2025-12-12 |
| DA Davidson | Maintain | Buy | 2025-12-11 |
| Keybanc | Maintain | Overweight | 2025-12-11 |
| Oppenheimer | Maintain | Outperform | 2025-08-25 |
| Baird | Maintain | Neutral | 2025-08-22 |
| Keybanc | Maintain | Overweight | 2025-07-15 |
| Baird | Maintain | Neutral | 2025-05-30 |
| Oppenheimer | Upgrade | Outperform | 2025-05-30 |
| Keybanc | Maintain | Overweight | 2025-04-08 |
Nordson Corporation’s grades show a consistently positive outlook, with multiple buy, overweight, and outperform ratings maintained or upgraded.
Which company has the best grades?
Nordson Corporation has received notably better grades than Illinois Tool Works Inc., with a clear consensus favoring buy and outperform ratings. This suggests stronger analyst confidence in Nordson’s prospects, potentially influencing investor sentiment and portfolio decisions towards greater optimism for Nordson.
Strengths and Weaknesses
Below is a comparative overview of key strengths and weaknesses for Illinois Tool Works Inc. (ITW) and Nordson Corporation (NDSN) based on the most recent data available.
| Criterion | Illinois Tool Works Inc. (ITW) | Nordson Corporation (NDSN) |
|---|---|---|
| Diversification | Highly diversified across 7 segments with balanced revenue streams totaling around 17B USD in 2024. | Moderate diversification in 3 main segments; total revenue approximately 2.5B USD in 2024. |
| Profitability | Strong profitability: Net margin 21.94%, ROIC 27.19%, ROE 105.16%, dividend yield 2.25%. | Good profitability: Net margin 17.35%, ROIC 10.49%, ROE 15.92%, dividend yield 1.36%. |
| Innovation | Demonstrates durable competitive advantage with very favorable moat and growing ROIC (+62%). | Slightly favorable moat but declining ROIC (-26.6%) signals weakening innovation impact. |
| Global presence | Large global footprint with diverse industrial markets served, including automotive and electronics. | Global presence focused on precision solutions and medical technologies, more niche. |
| Market Share | Strong market share in multiple industrial product segments, benefiting from scale and brand. | Smaller market share but specialized in adhesive and precision dispensing systems. |
Key takeaways: ITW offers a robust, diversified business with strong and growing profitability backed by a durable competitive moat. NDSN, while profitable and specialized, faces a declining profitability trend and less diversification, suggesting a need for caution and close monitoring of its strategic innovations.
Risk Analysis
Below is a comparison of key risks for Illinois Tool Works Inc. (ITW) and Nordson Corporation (NDSN) based on the most recent data from 2025-2026:
| Metric | Illinois Tool Works Inc. (ITW) | Nordson Corporation (NDSN) |
|---|---|---|
| Market Risk | Beta 1.17 indicates moderate volatility linked to industrial sector cycles | Beta 1.03 suggests slightly lower volatility but still exposed to sector fluctuations |
| Debt level | High debt-to-equity ratio (2.44) and 53.6% debt-to-assets, signaling elevated leverage risk | Moderate debt (debt-to-equity 0.69, debt-to-assets 35.4%), more conservative leverage profile |
| Regulatory Risk | Moderate, due to global operations in industrial manufacturing with compliance needs | Moderate, with exposure to product safety and environmental regulations across markets |
| Operational Risk | Diversified segments reduce impact, but complexity and supply chain dependencies remain | Focused product lines lower complexity but increase risk if key markets or technologies shift |
| Environmental Risk | Moderate, with some exposure due to manufacturing and chemical products | Moderate, largely linked to materials handling and coatings, with growing sustainability pressures |
| Geopolitical Risk | Moderate, with global footprint exposing it to trade tensions and tariffs | Moderate, with some exposure but smaller global scale than ITW |
The most impactful risks are ITW’s high leverage increasing financial vulnerability despite strong operational performance, and market risks affecting both companies amid industrial sector cyclicality. Nordson’s moderate debt and focused operations provide some risk mitigation but market and regulatory dynamics remain critical. Recent strong financial scores for both firms suggest resilience but caution on leverage and market volatility is warranted.
Which Stock to Choose?
Illinois Tool Works Inc. (ITW) shows a favorable income evolution with strong growth in net income and EPS over five years. Its financial ratios are slightly favorable, highlighting high profitability and efficiency but with elevated debt levels. ITW’s very favorable rating and strong economic moat reflect durable competitive advantages and robust value creation.
Nordson Corporation (NDSN) presents a favorable but more moderate income growth, with recent challenges in EBIT and net margin trends. Its financial ratios are slightly favorable, marked by solid margins and liquidity but higher debt risk and declining ROIC. NDSN’s rating is also very favorable, though its moat is only slightly favorable due to weakening profitability.
For investors prioritizing durable competitive advantages and consistent profitability, ITW might appear more favorable given its very favorable moat and stronger income growth. Conversely, those focused on companies with improving liquidity and moderate growth could see NDSN as a potentially suitable option despite its declining ROIC. Ultimately, the choice could depend on the investor’s risk tolerance and preference for growth versus stability.
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 Illinois Tool Works Inc. and Nordson Corporation to enhance your investment decisions:
