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

Analyst Recommendations

This is a summary of current recommendations and price targets for General Electric and Illinois Tool Works, as provided by MarketBeat.

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

General Electric currently has a consensus price target of $30.33, indicating a potential upside of 17.07%. Illinois Tool Works has a consensus price target of $150.45, indicating a potential upside of 2.15%. Given General Electric’s higher possible upside, research analysts clearly believe General Electric is more favorable than Illinois Tool Works.

Institutional & Insider Ownership

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

Earnings and Valuation

This table compares General Electric and Illinois Tool Works’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
General Electric $119.93 billion 1.88 $17.64 billion $0.98 26.44
Illinois Tool Works $13.80 billion 3.69 $3.62 billion $5.95 24.75

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.

Dividends

General Electric pays an annual dividend of $0.96 per share and has a dividend yield of 3.7%. Illinois Tool Works pays an annual dividend of $2.60 per share and has a dividend yield of 1.8%. 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 pays out 43.7% of its earnings in the form of a dividend. General Electric has raised its dividend for 53 consecutive years. General Electric is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

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

Profitability

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

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

Summary

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

About General Electric

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.

About Illinois Tool Works

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.

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