Critical Review: Illinois Tool Works (NYSE:ITW) & Trimble (NASDAQ:TRMB)

Trimble (NASDAQ:TRMB) and Illinois Tool Works (NYSE:ITW) are both large-cap industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, risk, profitability, institutional ownership, analyst recommendations, dividends and earnings.

Insider & Institutional Ownership

93.2% of Trimble shares are owned by institutional investors. Comparatively, 79.8% of Illinois Tool Works shares are owned by institutional investors. 0.5% of Trimble shares are owned by insiders. Comparatively, 0.9% of Illinois Tool Works shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Trimble has a beta of 1.57, indicating that its share price is 57% more volatile than the S&P 500. Comparatively, Illinois Tool Works has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Trimble	11.82%	11.18%	7.00%
Illinois Tool Works	19.11%	95.16%	19.22%

Earnings and Valuation

This table compares Trimble and Illinois Tool Works”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trimble	$3.59 billion	4.11	$424.00 million	$1.75	35.98
Illinois Tool Works	$16.04 billion	4.64	$3.07 billion	$10.49	24.64

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Trimble and Illinois Tool Works, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trimble	0	1	9	1	3.00
Illinois Tool Works	5	7	2	0	1.79

Trimble currently has a consensus target price of $93.75, indicating a potential upside of 48.88%. Illinois Tool Works has a consensus target price of $275.69, indicating a potential upside of 6.66%. Given Trimble’s stronger consensus rating and higher probable upside, analysts plainly believe Trimble is more favorable than Illinois Tool Works.

Summary

Illinois Tool Works beats Trimble on 8 of the 15 factors compared between the two stocks.

About Trimble

Trimble Inc. provides technology solutions that enable professionals and field mobile workers to enhance or transform their work processes worldwide. The company's Buildings and Infrastructure segment offers field and office software for project design and visualization; systems to guide and control construction equipment; software for 3D design and data sharing; systems to monitor, track, and manage assets, equipment, and workers; software to share and communicate data; program management solutions for construction owners; 3D conceptual design and modeling software; building information modeling software; enterprise resource planning, project management, and project collaboration solutions; integrated site layout and measurement systems; cost estimating, scheduling, and project controls solutions; and applications for sub-contractors and trades. Its Geospatial segment provides surveying and geospatial products, and geographic information systems. The company's Resources and Utilities segment offers precision agriculture products and services, such as guidance and positioning systems, including autonomous steering systems, automated and variable-rate application and technology systems, and information management solutions; manual and automated navigation guidance for tractors and other farm equipment; solutions to automate application of pesticide and seeding; water solutions; and agricultural software. Its Transportation segment offers solutions for long haul trucking and freight shipper markets; mobility solutions comprising route management, safety and compliance, end-to-end vehicle management, video intelligence, and supply chain communications; and fleet and transportation management systems, analytics, routing, mapping, reporting, and predictive modeling solutions. The company was formerly known as Trimble Navigation Limited and changed its name to Trimble Inc. in October 2016. Trimble Inc. was founded in 1978 and is headquartered in Westminster, Colorado.

About Illinois Tool Works

Illinois Tool Works Inc. manufactures and sells industrial products and equipment in the United States and internationally. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The Automotive OEM segment offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks, and other industrial uses. The Food Equipment segment provides warewashing, refrigeration, cooking, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services. The Test & Measurement and Electronics segment produces and sells equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. The Welding segment produces arc welding equipment; and metal arc welding consumables and related accessories. 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 offers engineered fastening systems and solutions for the residential construction, renovation/remodel, and commercial construction markets. The Specialty Products segment provides beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. It serves the automotive OEM and tiers, MRO, commercial food equipment, construction, general industrial, industrial capital goods, consumer durables, automotive aftermarket end, and other markets. The company distributes its products directly to industrial manufacturers, as well as through independent distributors. Illinois Tool Works Inc. was founded in 1912 and is based in Glenview, Illinois.