Gates Industrial (GTES) & Illinois Tool Works (ITW) Head to Head Survey

Gates Industrial (NYSE: GTES) and Illinois Tool Works (NYSE:ITW) are both construction companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Institutional and Insider Ownership

3.2% of Gates Industrial shares are held by institutional investors. Comparatively, 78.2% of Illinois Tool Works shares are held by institutional investors. 0.9% of Illinois Tool Works shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Illinois Tool Works pays an annual dividend of $3.12 per share and has a dividend yield of 2.1%. Gates Industrial does not pay a dividend. Illinois Tool Works pays out 47.3% of its earnings in the form of a dividend. Illinois Tool Works has raised its dividend for 54 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Gates Industrial N/A N/A N/A
Illinois Tool Works 12.36% 51.79% 14.74%

Valuation and Earnings

This table compares Gates Industrial and Illinois Tool Works’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gates Industrial $3.04 billion 1.43 $151.30 million $0.82 18.62
Illinois Tool Works $14.31 billion 3.47 $1.69 billion $6.59 22.26

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

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gates Industrial 0 2 6 0 2.75
Illinois Tool Works 0 8 6 1 2.53

Gates Industrial currently has a consensus price target of $22.00, suggesting a potential upside of 44.07%. Illinois Tool Works has a consensus price target of $176.64, suggesting a potential upside of 20.53%. Given Gates Industrial’s stronger consensus rating and higher probable upside, equities analysts plainly believe Gates Industrial is more favorable than Illinois Tool Works.

Summary

Illinois Tool Works beats Gates Industrial on 12 of the 15 factors compared between the two stocks.

Gates Industrial Company Profile

Gates Industrial Corporation PLC designs and manufactures power transmission equipment. Its products serves harsh and hazardous industries such as agriculture, construction, manufacturing and energy, to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners and virtually every form of transportation.

Illinois Tool Works Company Profile

Illinois Tool Works Inc. manufactures and sells industrial products and equipment worldwide. 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 produces warewashing, cooking, refrigeration, 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 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; metal arc welding consumables and related accessories; and metal jacketing and other insulation products for various 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 produces engineered fastening systems and solutions for the residential construction, renovation/remodel, and commercial construction markets. The Specialty Products segment offers beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. It serves the food and beverage, consumer durables, general industrial, printing and publishing, and industrial capital goods 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 headquartered in Glenview, Illinois.

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