Financial Comparison: Illinois Tool Works (NYSE:ITW) & General Electric (GE)

Illinois Tool Works (NYSE: ITW) and General Electric (NYSE:GE) are both large-cap industrial products companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, profitabiliy, valuation, dividends and risk.

Dividends

Illinois Tool Works pays an annual dividend of $2.60 per share and has a dividend yield of 1.8%. General Electric pays an annual dividend of $0.96 per share and has a dividend yield of 3.6%. Illinois Tool Works pays out 43.7% of its earnings in the form of a dividend. General Electric pays out 98.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Illinois Tool Works has raised its dividend for 53 consecutive years.

Analyst Recommendations

This is a summary of current ratings and target prices for Illinois Tool Works and General Electric, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Illinois Tool Works 0 5 6 0 2.55
General Electric 2 8 9 0 2.37

Illinois Tool Works currently has a consensus target price of $150.45, suggesting a potential upside of 2.27%. General Electric has a consensus target price of $30.33, suggesting a potential upside of 13.65%. Given General Electric’s higher possible upside, analysts clearly believe General Electric is more favorable than Illinois Tool Works.

Insider and Institutional Ownership

75.5% of Illinois Tool Works shares are owned by institutional investors. Comparatively, 54.2% of General Electric shares are owned by institutional investors. 0.9% of Illinois Tool Works shares are owned by company insiders. Comparatively, 0.4% of General Electric shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Illinois Tool Works and General Electric’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Illinois Tool Works 15.24% 45.02% 13.51%
General Electric 7.48% 16.59% 3.57%

Volatility & Risk

Illinois Tool Works has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500. Comparatively, General Electric has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500.

Valuation and Earnings

This table compares Illinois Tool Works and General Electric’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Illinois Tool Works $13.80 billion 3.68 $3.62 billion $5.95 24.73
General Electric $119.93 billion 1.93 $17.64 billion $0.98 27.23

General Electric has higher revenue and earnings than Illinois Tool Works. Illinois Tool Works is trading at a lower price-to-earnings ratio than General Electric, indicating that it is currently the more affordable of the two stocks.

Summary

Illinois Tool Works beats General Electric on 10 of the 17 factors compared between the two stocks.

Illinois Tool Works Company Profile

Illinois Tool Works Inc. is a manufacturer of industrial products and equipment. The Company operates through seven segments. The Automotive OEM segment produces components and fasteners for automotive-related applications. The Food Equipment segment offers commercial food equipment. The Test & Measurement and Electronics segment produces test and measurement, and electronic manufacturing and maintenance, repair and operations (MRO) solutions. The Welding segment produces welding equipment, consumables and accessories for industrial and commercial applications. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment supplies engineered fastening systems and solutions. The Specialty Products segment produces beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners.

General Electric Company Profile

General Electric Company is a global digital industrial company. The Company’s products and services range from aircraft engines, power generation, and oil and gas production equipment to medical imaging, financing and industrial products. Its segments include Power, which includes products and services related to energy production and water reuse; Renewable Energy, which offers renewable power sources; Oil & Gas, including liquefied natural gas and pipelines; Aviation, which includes commercial and military aircraft engines, and integrated digital components, among others; Healthcare, which provides healthcare technologies in medical imaging, digital solutions, patient monitoring and diagnostics, and drug discovery, among others; Transportation, which is a supplier to the railroad, mining, marine, stationary power and drilling industries; Energy Connections & Lighting, which includes Energy Connections and Lighting businesses, and Capital, which is a financial services division.

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