Home > Comparison > Industrials > PH vs ITW
The strategic rivalry between Parker-Hannifin Corporation and Illinois Tool Works Inc. shapes the industrial machinery sector’s competitive landscape. Parker-Hannifin operates as a diversified industrial and aerospace systems leader, emphasizing motion and control technologies. In contrast, Illinois Tool Works excels as a multi-segment industrial equipment manufacturer with broad market exposure. This analysis evaluates which operational model offers superior risk-adjusted returns, guiding investors toward the optimal choice for a balanced portfolio.
Table of contents
Companies Overview
Parker-Hannifin and Illinois Tool Works dominate key segments of the industrial machinery market with robust global footprints.
Parker-Hannifin Corporation: Leader in Motion and Control Technologies
Parker-Hannifin drives revenue through its motion and control technologies for mobile, industrial, and aerospace sectors. Its dual segments, Diversified Industrial and Aerospace Systems, offer hydraulic, pneumatic, and electromechanical components. In 2026, the company sharpened focus on advanced fluid conveyance and aerospace system innovation, serving OEMs and aftermarket distributors worldwide from its Cleveland base.
Illinois Tool Works Inc.: Diversified Industrial Products Powerhouse
Illinois Tool Works generates revenue across seven diverse segments, including Automotive OEM and Food Equipment. It leads in engineered fastening systems, welding, and test equipment. The 2026 strategy emphasized expanding specialty products and construction solutions, leveraging direct sales and independent distributors to serve automotive, construction, and industrial markets globally from Glenview, Illinois.
Strategic Collision: Similarities & Divergences
Both companies excel in industrial machinery but diverge in approach: Parker-Hannifin focuses on integrated motion control and aerospace, while Illinois Tool Works pursues broad industrial diversification. Their primary battleground is OEM manufacturing and aftermarket services. Investors face distinct profiles: Parker-Hannifin bets on aerospace innovation; Illinois Tool Works rides industrial breadth and segmental resilience.
Income Statement Comparison
This data dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | Parker-Hannifin Corporation (PH) | Illinois Tool Works Inc. (ITW) |
|---|---|---|
| Revenue | 19.85B | 15.90B |
| Cost of Revenue | 12.54B | 8.96B |
| Operating Expenses | 3.26B | 2.68B |
| Gross Profit | 7.32B | 6.94B |
| EBITDA | 5.42B | 5.11B |
| EBIT | 4.52B | 4.71B |
| Interest Expense | 409M | 283M |
| Net Income | 3.53B | 3.49B |
| EPS | 27.52 | 11.75 |
| Fiscal Year | 2025 | 2024 |
Income Statement Analysis: The Bottom-Line Duel
This comparison reveals which company runs a more efficient and profitable business engine through their revenue and net income trends.
Parker-Hannifin Corporation Analysis
Parker-Hannifin’s revenue grew 38% from 2021 to 2025 but dipped slightly by 0.4% in the latest year. Net income more than doubled over the period, surging 102%, with a robust net margin near 18%. The company improved EBIT by 10% last year, showing strong operational momentum and margin expansion.
Illinois Tool Works Inc. Analysis
Illinois Tool Works experienced a 26% revenue rise over five years but saw a 1.3% decline in the latest year. Net income rose 65% overall, with a healthy net margin of 22%. EBIT grew 15% last year, reflecting solid earnings power and efficient cost management despite slight top-line pressure.
Margin Discipline vs. Growth Momentum
Illinois Tool Works leads in gross and net margins at 44% and 22%, respectively, highlighting superior cost control. Parker-Hannifin shows higher revenue and net income growth rates, doubling its bottom line in five years. For investors, Illinois Tool Works offers margin strength, while Parker-Hannifin presents compelling growth momentum.
Financial Ratios Comparison
These vital ratios act as a diagnostic tool to expose the underlying fiscal health, valuation premiums, and capital efficiency of the companies compared below:
| Ratios | Parker-Hannifin (PH) | Illinois Tool Works (ITW) |
|---|---|---|
| ROE | 25.81% | 105.19% |
| ROIC | 13.69% | 27.19% |
| P/E | 25.38 | 21.58 |
| P/B | 6.55 | 22.69 |
| Current Ratio | 1.19 | 1.36 |
| Quick Ratio | 0.71 | 0.99 |
| D/E | 0.69 | 2.44 |
| Debt-to-Assets | 32.16% | 53.61% |
| Interest Coverage | 9.93 | 15.07 |
| Asset Turnover | 0.67 | 1.06 |
| Fixed Asset Turnover | 6.76 | 6.91 |
| Payout Ratio | 24.38% | 48.60% |
| Dividend Yield | 0.96% | 2.25% |
| Fiscal Year | 2025 | 2024 |
Efficiency & Valuation Duel: The Vital Signs
Financial ratios serve as the company’s DNA, uncovering hidden risks and revealing operational excellence behind headline figures.
Parker-Hannifin Corporation
Parker-Hannifin delivers solid profitability with a 25.8% ROE and a healthy 17.8% net margin, signaling operational strength. However, its valuation appears stretched, with a high P/E of 25.4 and P/B of 6.6. Dividend yield is low at 0.96%, suggesting limited shareholder returns and possible reinvestment focus on growth or R&D.
Illinois Tool Works Inc.
Illinois Tool Works excels with an extraordinary 105.2% ROE and a robust 21.9% net margin, reflecting exceptional efficiency. Its P/E of 21.6 sits at a neutral valuation level, while a high P/B of 22.7 indicates market expectations for growth. ITW supports shareholders with a 2.25% dividend yield, balancing returns with reinvestment.
Premium Valuation vs. Operational Safety
Illinois Tool Works shows superior profitability and shareholder returns but carries high leverage and an elevated P/B ratio. Parker-Hannifin offers a more conservative debt profile and solid margins, though at a higher P/E multiple. Investors favoring growth and yield may lean toward ITW; those prioritizing operational safety might prefer Parker-Hannifin.
Which one offers the Superior Shareholder Reward?
I observe Parker-Hannifin (PH) yields about 0.96% with a modest payout ratio near 24%, supported by strong free cash flow covering dividends almost 89%. PH’s buybacks are consistent but less intense than Illinois Tool Works (ITW). ITW offers a higher 2.25% dividend yield but pays nearly 49% of earnings, pressuring free cash flow coverage to about 87%. ITW’s aggressive buyback program adds significant shareholder value. I see PH’s balanced payout and strong cash flow as more sustainable long term. Yet, ITW’s higher yield plus buybacks suggest superior near-term total return. For 2026, I favor ITW for total shareholder reward, but PH scores higher on distribution sustainability.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental DNA and trade-offs of Parker-Hannifin Corporation and Illinois Tool Works Inc.:
Both firms deliver very favorable returns on equity and assets, reflecting operational efficiency. Parker-Hannifin shows a more balanced debt profile with a moderate debt-to-equity score of 2, whereas Illinois Tool Works carries higher leverage risk at 1. Valuation metrics are equally weak for both, indicating potential overvaluation or market skepticism. Overall, Parker-Hannifin leans on financial stability, while Illinois Tool Works relies on operational strength amid higher financial risk.
Bankruptcy Risk: Solvency Showdown
The Altman Z-Score comparison shows both companies firmly in the safe zone, with Illinois Tool Works slightly ahead:
Both firms demonstrate strong financial resilience unlikely to face bankruptcy risks in this cycle. Illinois Tool Works’ higher score suggests marginally better long-term solvency, supporting a more robust capital structure.
Financial Health: Quality of Operations
Piotroski F-Scores indicate robust internal financial health, with Parker-Hannifin leading by a narrow margin:
Parker-Hannifin’s score of 8 signals very strong fundamentals and effective capital allocation. Illinois Tool Works scores 7, still strong but with slightly more room for improvement in financial quality. Neither shows red flags, but Parker-Hannifin’s edge hints at superior operational discipline.
How are the two companies positioned?
This section dissects the operational DNA of PH and ITW by comparing their revenue distribution by segment and internal dynamics. Our goal is to confront their economic moats to identify the most resilient and sustainable competitive advantage in today’s market.
Revenue Segmentation: The Strategic Mix
The following visual comparison dissects how Parker-Hannifin and Illinois Tool Works diversify their income streams and where their primary sector bets lie:
Parker-Hannifin anchors its revenue in two segments: $13.7B in Diversified Industrial and $6.2B in Aerospace Systems. Illinois Tool Works boasts a more diversified mix, with seven segments each generating between $1.7B and $3.2B in 2024. ITW’s broad portfolio reduces concentration risk, while Parker-Hannifin’s focus suggests strong ecosystem lock-in in industrial and aerospace infrastructure. This contrast highlights ITW’s strategic resilience versus PH’s reliance on fewer, larger bets.
Strengths and Weaknesses Comparison
This table compares the Strengths and Weaknesses of Parker-Hannifin Corporation (PH) and Illinois Tool Works Inc. (ITW):
PH Strengths
- Diversified Industrial and Aerospace segments with steady revenue streams
- Favorable ROE of 25.81% and ROIC of 13.69% indicate efficient capital use
- Strong interest coverage ratio at 11.04 supports financial stability
- Presence in major global regions including North America and Europe
ITW Strengths
- Broad product diversification across seven segments reduces market risk
- Exceptionally high ROE of 105.19% and ROIC of 27.19% show superior profitability
- Favorable net margin at 21.94% outperforms sector averages
- Solid global presence with strong revenues in North America, Europe, Asia Pacific
PH Weaknesses
- Elevated P/E at 25.38 and P/B at 6.55 may indicate overvaluation risk
- Quick ratio of 0.71 signals potential liquidity concerns
- Dividend yield below 1% may limit income appeal
- Moderate asset turnover at 0.67 suggests less efficient asset use
ITW Weaknesses
- High debt-to-equity ratio at 2.44 and debt-to-assets at 53.61% raise leverage risk
- Unfavorable P/B ratio of 22.69 may reflect inflated valuation
- Quick ratio below 1.0 indicates less liquidity cushion
- Dividend yield relatively better but company carries higher financial risk
Both companies demonstrate solid strengths in profitability and global reach. PH shows more conservative leverage but weaker liquidity, while ITW excels in capital efficiency but carries higher debt. Each profile implies distinct strategic priorities regarding capital structure and operational focus.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat is the only reliable shield protecting long-term profits from relentless competitive erosion. Let’s dissect the strengths of each contender:
Parker-Hannifin Corporation: Precision Engineering Moat
I see Parker-Hannifin’s moat rooted in advanced engineering and specialized motion control systems. This manifests in a solid ROIC exceeding WACC by 4.4%, with rising profitability and stable margins. Expansion into aerospace and industrial markets in 2026 should reinforce this advantage but requires vigilance against technological disruption.
Illinois Tool Works Inc.: Diversified Operational Moat
Illinois Tool Works leverages a broad product portfolio and scale to maintain cost advantages and customer stickiness. Its ROIC outpaces WACC by a striking 18.5%, with strong margin expansion, indicating efficient capital use. This diversified moat contrasts with Parker-Hannifin’s niche focus and offers robust growth potential across multiple industrial segments.
Moat Mastery: Specialized Engineering vs. Diversified Scale
Illinois Tool Works boasts a wider moat, delivering a substantially higher ROIC spread and faster growth in capital returns. While Parker-Hannifin’s niche expertise is durable, Illinois Tool Works’ scale and diversification better defend market share against disruption and economic cycles.
Which stock offers better returns?
Over the past year, Parker-Hannifin surged sharply with accelerating gains, while Illinois Tool Works showed minimal overall price change amid steady but slower momentum.
Trend Comparison
Parker-Hannifin’s stock rose 74.16% over the last 12 months, showing a bullish trend with accelerating momentum and a high volatility of 112.58, hitting a peak at 944.27.
Illinois Tool Works gained only 0.03% in the same period, marking a neutral overall trend despite slight acceleration and low volatility of 10.7, with its price ranging between 225.57 and 277.52.
Parker-Hannifin outperformed Illinois Tool Works substantially, delivering the highest market return and stronger upward price acceleration over the past year.
Target Prices
Analysts present a clear consensus on target prices for Parker-Hannifin Corporation and Illinois Tool Works Inc.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| Parker-Hannifin Corporation | 825 | 1,139 | 995.46 |
| Illinois Tool Works Inc. | 230 | 275 | 254 |
The consensus target for Parker-Hannifin sits about 6% above the current price of $935.84, indicating moderate upside potential. Illinois Tool Works’ target consensus of $254 reflects a modest 3% premium over its $261.26 price, suggesting a near-term trading range rather than a strong directional signal.
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How do institutions grade them?
The following tables summarize recent institutional grades for Parker-Hannifin Corporation and Illinois Tool Works Inc.:
Parker-Hannifin Corporation Grades
This table lists recent grades assigned by major financial institutions to Parker-Hannifin Corporation.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Wells Fargo | maintain | Overweight | 2026-01-30 |
| Citigroup | maintain | Buy | 2026-01-30 |
| JP Morgan | maintain | Overweight | 2026-01-30 |
| Jefferies | maintain | Buy | 2026-01-30 |
| Barclays | maintain | Overweight | 2026-01-30 |
| Stifel | maintain | Hold | 2026-01-30 |
| Stifel | maintain | Hold | 2026-01-23 |
| JP Morgan | maintain | Overweight | 2026-01-16 |
| Morgan Stanley | maintain | Equal Weight | 2026-01-14 |
| Barclays | maintain | Overweight | 2026-01-07 |
Illinois Tool Works Inc. Grades
This table shows recent grades assigned by major financial institutions to 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 |
| Wells Fargo | maintain | Underweight | 2025-10-27 |
| Truist Securities | maintain | Hold | 2025-10-27 |
| Barclays | 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 |
| Stifel | maintain | Hold | 2025-07-31 |
Which company has the best grades?
Parker-Hannifin consistently earns “Buy” and “Overweight” grades, signaling a positive outlook. Illinois Tool Works mainly receives “Underweight” and “Sell” ratings, indicating caution. Investors may interpret this as stronger institutional confidence in Parker-Hannifin.
Risks specific to each company
The following categories identify critical pressure points and systemic threats facing Parker-Hannifin Corporation and Illinois Tool Works Inc. in the 2026 market environment:
1. Market & Competition
Parker-Hannifin Corporation
- Faces pressure from diversified industrial and aerospace sectors with evolving OEM demands.
Illinois Tool Works Inc.
- Operates in broader segments, intensifying competition across automotive, food equipment, and construction markets.
2. Capital Structure & Debt
Parker-Hannifin Corporation
- Maintains a moderate debt-to-equity ratio (0.69) with neutral financial risk.
Illinois Tool Works Inc.
- Carries high leverage (D/E 2.44), increasing financial risk and potential vulnerability to interest rate hikes.
3. Stock Volatility
Parker-Hannifin Corporation
- Beta at 1.25 shows moderately higher volatility than the market.
Illinois Tool Works Inc.
- Slightly lower beta of 1.16 suggests less sensitivity to market swings.
4. Regulatory & Legal
Parker-Hannifin Corporation
- Aerospace segment exposes it to stringent safety and export regulations.
Illinois Tool Works Inc.
- Diverse industrial exposure requires compliance with multiple sector-specific regulations globally.
5. Supply Chain & Operations
Parker-Hannifin Corporation
- Complex aerospace and industrial supply chains pose risks amidst global disruptions.
Illinois Tool Works Inc.
- Broad operational footprint increases exposure to supply chain bottlenecks and component shortages.
6. ESG & Climate Transition
Parker-Hannifin Corporation
- Pressure to innovate in eco-friendly aerospace systems and industrial products.
Illinois Tool Works Inc.
- Faces challenges managing emissions and sustainability across diverse manufacturing segments.
7. Geopolitical Exposure
Parker-Hannifin Corporation
- Global aerospace markets expose it to geopolitical tensions affecting defense contracts.
Illinois Tool Works Inc.
- Wide international operations increase exposure to tariffs, trade disputes, and regional instability.
Which company shows a better risk-adjusted profile?
Parker-Hannifin’s moderate debt and strong Altman Z-Score suggest better financial stability. Illinois Tool Works carries heavier leverage but benefits from diversified revenue streams. PH’s aerospace regulatory risks contrast with ITW’s broader but less concentrated geopolitical exposures. I see Parker-Hannifin offering a cleaner risk-adjusted profile, especially due to its safer balance sheet and strong financial scores. Recent data highlight ITW’s high debt-to-equity ratio as its most significant vulnerability.
Final Verdict: Which stock to choose?
Parker-Hannifin’s superpower lies in its durable value creation, evidenced by steadily growing ROIC that outpaces its cost of capital. This efficiency fuels robust profitability, although its relatively high price-to-book ratio signals a point of vigilance. It suits investors targeting aggressive growth with tolerance for valuation premium.
Illinois Tool Works commands a strategic moat through superior capital returns and a historically strong ROIC trend. Its higher net margin and dividend yield offer a safety cushion compared to Parker-Hannifin. This profile fits well for investors seeking growth at a reasonable price, balancing performance with stability.
If you prioritize high-value creation and can stomach valuation premiums, Parker-Hannifin outshines with a compelling growth trajectory. However, if you seek better stability and income potential alongside efficient capital use, Illinois Tool Works offers a more balanced risk-reward profile. Both present very favorable moat dynamics but cater to distinct investor archetypes.
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 Parker-Hannifin Corporation and Illinois Tool Works Inc. to enhance your investment decisions:
