Investors seeking opportunities in the industrial machinery sector will find Illinois Tool Works Inc. (ITW) and Pentair plc (PNR) compelling candidates. Both companies operate globally, delivering innovative solutions in machinery and fluid management, yet they target distinct market niches with overlapping industrial applications. This analysis will explore their strategies, market positions, and growth potential to help you determine which company aligns best with your investment goals. Let’s uncover which stock stands out for your portfolio.
Table of contents
Companies Overview
I will begin the comparison between Illinois Tool Works Inc. and Pentair plc 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 globally. It operates through seven segments, including Automotive OEM, Food Equipment, Welding, and Specialty Products, serving diverse markets such as automotive, construction, and food equipment. Founded in 1912 and based in Glenview, Illinois, ITW leverages a broad portfolio to maintain its position in industrial machinery.
Pentair plc Overview
Pentair plc provides water solutions worldwide, operating through Consumer Solutions and Industrial & Flow Technologies segments. Its offerings include residential and commercial pool equipment, water treatment products, and fluid treatment systems for various applications. Founded in 1966 and headquartered in London, Pentair serves markets related to water filtration, irrigation, and wastewater treatment with multiple well-known brands.
Key similarities and differences
Both ITW and Pentair operate within the industrial machinery sector and serve global markets with diversified product lines. ITW has a broader industrial focus spanning multiple segments beyond water solutions, while Pentair specializes mainly in water treatment and fluid technologies. ITW employs a significantly larger workforce and has a higher market capitalization compared to Pentair, reflecting differences in scale and market reach.
Income Statement Comparison
Below is a side-by-side comparison of key income statement metrics for Illinois Tool Works Inc. and Pentair plc for the fiscal year 2024.
| Metric | Illinois Tool Works Inc. (ITW) | Pentair plc (PNR) |
|---|---|---|
| Market Cap | 74.7B | 16.9B |
| Revenue | 15.9B | 4.1B |
| EBITDA | 5.1B | 922M |
| EBIT | 4.7B | 808M |
| Net Income | 3.5B | 625M |
| EPS | 11.75 | 3.78 |
| Fiscal Year | 2024 | 2024 |
Income Statement Interpretations
Illinois Tool Works Inc.
Illinois Tool Works showed overall revenue growth of 26.44% from 2020 to 2024 but experienced a slight 1.3% decline in revenue in 2024. Net income increased strongly by 65.39% over the period with a 19.51% net margin growth last year, reflecting improved profitability. The 2024 year saw EBIT margin rise to 29.59%, signaling enhanced operational efficiency despite the revenue dip.
Pentair plc
Pentair’s revenue grew 35.29% over 2020-2024 but dipped marginally by 0.53% in 2024. Net income surged 74.4% across the period, with net margin improving 28.91%. In 2024, EBIT margin reached 19.78%, up 9.54% year-over-year, while EPS growth stagnated. Operational expenses decreased slightly relative to revenue, supporting margin stability amid flat revenue growth.
Which one has the stronger fundamentals?
Both companies exhibit favorable income statement fundamentals with strong net income and margin growth over five years. Illinois Tool Works maintains higher margins and more consistent earnings growth, despite a minor revenue drop in 2024. Pentair shows solid revenue expansion but faces flat EPS and modest margin gains recently. Overall, Illinois Tool Works presents more robust profitability metrics, while Pentair demonstrates stronger revenue growth but slightly less earnings momentum.
Financial Ratios Comparison
The table below compares key financial ratios for Illinois Tool Works Inc. (ITW) and Pentair plc (PNR) based on their most recent fiscal year data from 2024.
| Ratios | Illinois Tool Works Inc. (ITW) | Pentair plc (PNR) |
|---|---|---|
| ROE | 105.2% | 17.6% |
| ROIC | 27.2% | 12.5% |
| P/E | 21.6 | 26.9 |
| P/B | 22.7 | 4.7 |
| Current Ratio | 1.36 | 1.60 |
| Quick Ratio | 0.99 | 0.92 |
| D/E (Debt-to-Equity) | 2.44 | 0.50 |
| Debt-to-Assets | 53.6% | 27.4% |
| Interest Coverage | 15.1 | 9.1 |
| Asset Turnover | 1.06 | 0.63 |
| Fixed Asset Turnover | 6.91 | 8.60 |
| Payout ratio | 48.6% | 24.4% |
| Dividend yield | 2.25% | 0.91% |
Interpretation of the Ratios
Illinois Tool Works Inc.
Illinois Tool Works shows a mix of strong and weak ratios. Its net margin, ROE, ROIC, interest coverage, and asset turnover are favorable, indicating solid profitability and operational efficiency. However, elevated debt-to-equity (2.44) and debt-to-assets (53.61%) ratios raise concerns about leverage. The dividend yield stands at a favorable 2.25%, supported by consistent payouts, though debt levels warrant caution.
Pentair plc
Pentair exhibits mostly favorable ratios, including net margin, ROE, ROIC, current ratio, and interest coverage, reflecting a stable financial position and efficient operations. The company’s low debt-to-equity (0.5) and debt-to-assets (27.41%) ratios highlight conservative leverage. Its dividend yield of 0.91% is relatively low, potentially indicating modest shareholder returns or reinvestment priorities.
Which one has the best ratios?
Pentair’s ratios are generally more favorable, especially regarding leverage and liquidity, with 57.14% favorable metrics versus Illinois Tool Works’ 50%. While Illinois Tool Works excels in profitability, its higher leverage and price-to-book ratio are less attractive. Overall, Pentair’s balanced profile suggests stronger financial health under current metrics.
Strategic Positioning
This section compares the strategic positioning of Illinois Tool Works Inc. and Pentair plc, focusing on market position, key segments, and exposure to technological disruption:
Illinois Tool Works Inc.
- Large market cap (~75B USD) with diversified industrial machinery segments facing moderate competitive pressure.
- Operates seven diverse segments including automotive, food equipment, welding, and construction products driving revenue.
- Exposure to disruption is limited by diversified industrial applications, including electronics and polymers with incremental innovation.
Pentair plc
- Smaller market cap (~17B USD) focused on water solutions with niche competitive dynamics.
- Operates two main segments: Consumer Solutions and Industrial & Flow Technologies centered on water treatment and pool equipment.
- Faces technological disruption primarily in advanced membrane filtration and fluid treatment systems within water management.
Illinois Tool Works Inc. vs Pentair plc Positioning
Illinois Tool Works follows a diversified industrial product strategy across multiple end markets, offering risk spreading but complexity. Pentair focuses on water solutions with concentrated segments, allowing specialization but less diversification.
Which has the best competitive advantage?
Both companies demonstrate very favorable moats with growing ROIC above WACC, indicating durable competitive advantages. Illinois Tool Works shows a stronger value creation margin and higher ROIC growth, suggesting a more robust competitive advantage.
Stock Comparison
The stock prices of Illinois Tool Works Inc. (ITW) and Pentair plc (PNR) have exhibited contrasting dynamics over the past year, with ITW showing modest gains and recent acceleration, while PNR recorded a strong overall rise but has recently declined.
Trend Analysis
Illinois Tool Works Inc. (ITW) showed a bullish trend over the past 12 months with a 0.47% price increase and accelerating momentum. The stock fluctuated between a low of 225.57 and a high of 277.52.
Pentair plc (PNR) experienced a strong bullish trend with a 37.56% price increase over the past year but recently entered a bearish phase, declining 6.08% from late October 2025 to January 2026, with decelerating momentum.
Comparing both, PNR delivered the highest market performance overall despite its recent pullback, while ITW maintained steady gains with recent acceleration in trend.
Target Prices
The current analyst consensus presents a balanced outlook with defined high and low targets for Illinois Tool Works Inc. and Pentair plc.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Illinois Tool Works Inc. | 275 | 230 | 254 |
| Pentair plc | 135 | 90 | 122.63 |
Analysts expect Illinois Tool Works’ price to be slightly below the high range, close to its current price of 255.12 USD. Pentair’s consensus target at 122.63 USD suggests upside potential from its current 103.06 USD market price.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Illinois Tool Works Inc. and Pentair plc:
Rating Comparison
Illinois Tool Works Inc. Rating
- Rating: Both companies hold a “B” rating, considered very favorable.
- Discounted Cash Flow Score: Moderate score of 3 indicating fair valuation.
- ROE Score: Very favorable score of 5, showing strong profit generation from equity.
- ROA Score: Very favorable score of 5, reflecting excellent asset utilization.
- Debt To Equity Score: Very unfavorable score of 1, signaling high financial risk.
- Overall Score: Moderate score of 3 summarizing balanced financial standing.
Pentair plc Rating
- Rating: Both companies hold a “B” rating, considered very favorable.
- Discounted Cash Flow Score: Moderate score of 3 indicating fair valuation.
- ROE Score: Favorable score of 4, indicating efficient profit generation from equity.
- ROA Score: Very favorable score of 5, reflecting excellent asset utilization.
- Debt To Equity Score: Moderate score of 2, indicating lower financial risk than ITW.
- Overall Score: Moderate score of 3 summarizing balanced financial standing.
Which one is the best rated?
Both Illinois Tool Works and Pentair hold the same “B” rating with overall moderate scores. Illinois Tool Works excels in ROE but has a weaker debt position, while Pentair shows a better debt-to-equity score with slightly lower ROE.
Scores Comparison
Here is a comparison of Illinois Tool Works Inc. and Pentair plc based on their financial scores:
ITW Scores
- Altman Z-Score: 7.93, indicating a safe zone with low bankruptcy risk.
- Piotroski Score: 7, classified as strong financial health.
PNR Scores
- Altman Z-Score: 5.04, also in the safe zone signaling financial stability.
- Piotroski Score: 8, reflecting very strong financial strength.
Which company has the best scores?
Pentair plc has a lower Altman Z-Score than Illinois Tool Works but remains in the safe zone. Its Piotroski Score of 8 surpasses ITW’s 7, indicating slightly stronger financial health by this metric.
Grades Comparison
Here is a detailed comparison of recent grades for Illinois Tool Works Inc. and Pentair plc:
Illinois Tool Works Inc. Grades
The following table summarizes recent grades and rating changes 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’ ratings generally trend from Neutral to Underweight or Sell, indicating cautious sentiment with more downgrades than upgrades.
Pentair plc Grades
The following table presents recent grades and rating changes for Pentair plc:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| BNP Paribas Exane | Downgrade | Underperform | 2026-01-07 |
| TD Cowen | Downgrade | Sell | 2026-01-05 |
| Jefferies | Upgrade | Buy | 2025-12-10 |
| Barclays | Downgrade | Equal Weight | 2025-12-04 |
| Oppenheimer | Maintain | Outperform | 2025-11-20 |
| UBS | Maintain | Buy | 2025-10-22 |
| RBC Capital | Maintain | Outperform | 2025-10-22 |
| Barclays | Maintain | Overweight | 2025-10-22 |
| Oppenheimer | Maintain | Outperform | 2025-10-20 |
| JP Morgan | Maintain | Overweight | 2025-10-15 |
Pentair’s ratings show a mix of upgrades and downgrades, with a majority at Buy, Outperform, or Overweight, suggesting a more positive analyst view despite some recent downgrades.
Which company has the best grades?
Pentair plc has generally received better grades than Illinois Tool Works Inc., with more Buy and Outperform ratings compared to ITW’s dominant Underweight and Sell grades. Investors might interpret Pentair’s superior consensus as a signal of better growth or value prospects.
Strengths and Weaknesses
Below is a comparison table outlining the key strengths and weaknesses of Illinois Tool Works Inc. (ITW) and Pentair plc (PNR) based on their latest financial and operational data.
| Criterion | Illinois Tool Works Inc. (ITW) | Pentair plc (PNR) |
|---|---|---|
| Diversification | Highly diversified across 7 main segments, balancing revenues between Automotive OEM (3.19B), Test & Measurement (2.82B), Food Equipment (2.65B), and others | Moderate diversification with three main segments: Industrial & Flow Technologies (1.51B), Pool (1.44B), and Water Unit (1.13B) |
| Profitability | Very strong profitability with 21.94% net margin, ROIC of 27.19%, and ROE exceeding 100% | Good profitability: 15.32% net margin, ROIC of 12.52%, ROE at 17.55% |
| Innovation | Demonstrates durable competitive advantage with a very favorable moat and increasing ROIC trend (+62%) | Also shows a very favorable moat with growing ROIC (+14%), but at a lower level than ITW |
| Global presence | Extensive global operations reflected in broad product and segment reach | Global presence but more focused on water and flow-related solutions |
| Market Share | Strong market position with consistent revenue growth across segments | Solid market share in water and flow technologies, but smaller scale compared to ITW |
Key takeaways: ITW excels in diversification and profitability with a very strong economic moat and superior ROIC growth, reflecting robust operational efficiency. PNR maintains a favorable position with good profitability and growth but operates on a smaller, more focused scale. Both companies show durable competitive advantages, making them attractive but with different risk profiles.
Risk Analysis
Below is a comparative overview of key risks for Illinois Tool Works Inc. (ITW) and Pentair plc (PNR) based on the most recent data from 2024.
| Metric | Illinois Tool Works Inc. (ITW) | Pentair plc (PNR) |
|---|---|---|
| Market Risk | Beta 1.17 – moderate volatility | Beta 1.21 – slightly higher volatility |
| Debt level | High debt-to-equity ratio 2.44 (unfavorable) | Low debt-to-equity ratio 0.5 (favorable) |
| Regulatory Risk | Moderate – US industrial regulations | Moderate – UK and global water industry regulations |
| Operational Risk | Diversified segments reduce risk but complexity is high | Focused on water solutions, operational risk tied to supply chain |
| Environmental Risk | Exposure to stricter US environmental standards | Exposure to global water sustainability trends |
| Geopolitical Risk | Primarily US-based but global operations | UK-based with significant global exposure, sensitive to Brexit-related changes |
The most impactful risk for ITW is its high leverage, increasing financial vulnerability despite strong profitability and cash flow. For PNR, market volatility and regulatory shifts in water management are more likely to influence performance, though its lower debt offers better resilience. Both companies operate in sectors sensitive to environmental regulations and global supply chain disruptions.
Which Stock to Choose?
Illinois Tool Works Inc. (ITW) shows a generally favorable income evolution with strong net margin growth and profitability metrics. Its financial ratios indicate solid returns on equity and invested capital but reveal concerns regarding debt levels. The company holds a very favorable rating.
Pentair plc (PNR) also presents favorable income growth and profitability, though with lower returns compared to ITW. Its financial ratios are mostly favorable, especially debt management, but it faces challenges in valuation metrics. The overall rating is very favorable.
For investors, ITW might appear more attractive for those seeking high profitability and strong income growth despite higher leverage. Conversely, PNR could be preferred by investors prioritizing lower debt and moderate growth, fitting a more risk-averse strategy. Both companies demonstrate durable competitive advantages with growing ROIC, suggesting quality investing appeal.
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 Pentair plc to enhance your investment decisions:
