Financial Analysis: Illinois Tool Works (NYSE:ITW) & ATS (NYSE:ATS)

Illinois Tool Works (NYSE:ITW) and ATS (NYSE:ATS) are both industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, analyst recommendations, dividends, earnings and institutional ownership.

Insider and Institutional Ownership

79.8% of Illinois Tool Works shares are owned by institutional investors. Comparatively, 75.8% of ATS shares are owned by institutional investors. 0.8% of Illinois Tool Works shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Illinois Tool Works has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500. Comparatively, ATS has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Illinois Tool Works	19.32%	97.36%	19.41%
ATS	2.40%	9.40%	3.73%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Illinois Tool Works and ATS, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Illinois Tool Works	5	7	1	0	1.69
ATS	2	1	3	0	2.17

Illinois Tool Works presently has a consensus target price of $271.92, suggesting a potential upside of 5.71%. ATS has a consensus target price of $42.50, suggesting a potential upside of 55.39%. Given ATS’s stronger consensus rating and higher possible upside, analysts plainly believe ATS is more favorable than Illinois Tool Works.

Earnings & Valuation

This table compares Illinois Tool Works and ATS”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Illinois Tool Works	$16.04 billion	4.61	$3.07 billion	$10.77	23.88
ATS	$2.15 billion	1.25	$51.85 million	$0.52	52.60

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

Summary

Illinois Tool Works beats ATS on 9 of the 14 factors compared between the two stocks.

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.

About ATS

ATS Corporation, together with its subsidiaries, provides automation solutions worldwide. The company is also involved in planning, designing, building, commissioning, and servicing automated manufacturing and assembly systems, including automation products and test solutions. In addition, it offers pre-automation services comprising discovery and analysis, concept development, simulation, and total cost of ownership modelling; post automation services, including training, process optimization, preventative maintenance, emergency and on-call support, spare parts, retooling, retrofits, and equipment relocation; and contract manufacturing services, as well as after sales and services. Further, the company provides engineering design, prototyping, process verification, specification writing, software and manufacturing process controls development, standard automation products/platforms, equipment design and build, third-party equipment qualification, procurement and integration, automation system installation, product line commissioning, validation, and documentation services. Additionally, it offers value engineering, supply chain management, and integration and manufacturing capabilities, as well as other automation products and solutions; and software and digital solutions comprising connected factory floor management systems to capture, analyze, and use real time machine performance data to troubleshoot, deliver process and product solutions, prevent equipment downtime, drive operational efficiency, and unlock performance for sustainable production improvements. ATS Corporation serves life sciences, transportation and mobility, consumer products, food and beverage, electronics, nuclear, packaging, warehousing and distribution, and energy markets. The company was formerly known as ATS Automation Tooling Systems Inc. and changed its name to ATS Corporation in November 2022. ATS Corporation was founded in 1978 and is headquartered in Cambridge, Canada.