Core Viewpoint - Illinois Tool Works Inc. (ITW) is recognized for its strong operational performance but faces valuation challenges that limit upside potential according to Goldman Sachs [2]. Financial Performance - In Q3 2025, ITW achieved a record operating margin of 27.4%, an increase of 90 basis points, with enterprise initiatives contributing 140 basis points to this performance [3]. - Operating cash flow reached $1.0 billion, while free cash flow increased by 15% to $904 million, resulting in a 110% conversion rate relative to net income [3]. - For FY25, ITW maintained its operating margin guidance of 26% to 27%, with enterprise initiatives expected to add approximately 125 basis points for the full year [4]. Strategic Focus - Management emphasized ongoing progress on strategic growth priorities, aiming for above-market organic growth through customer-backed innovation [3]. - The company is on track to meet its 2030 performance goals, including a customer-backed innovation yield exceeding 3% [3][4]. Analyst Ratings - Goldman Sachs downgraded ITW to Sell from Neutral and reduced its price target to $230 from $258, citing limited upside from current levels and modest downside risk to earnings estimates [2].