Reviewing Zebra Technologies (ZBRA) and Illinois Tool Works (ITW)

Zebra Technologies (NASDAQ: ZBRA) and Illinois Tool Works (NYSE:ITW) are both industrial products companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Insider & Institutional Ownership

88.6% of Zebra Technologies shares are held by institutional investors. Comparatively, 77.2% of Illinois Tool Works shares are held by institutional investors. 2.3% of Zebra Technologies shares are held by insiders. Comparatively, 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 stock will outperform the market over the long term.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zebra Technologies 0 2 7 0 2.78
Illinois Tool Works 0 8 6 1 2.53

Zebra Technologies presently has a consensus target price of $150.00, indicating a potential downside of 3.82%. Illinois Tool Works has a consensus target price of $176.64, indicating a potential upside of 18.83%. Given Illinois Tool Works’ higher possible upside, analysts clearly believe Illinois Tool Works is more favorable than Zebra Technologies.

Dividends

Illinois Tool Works pays an annual dividend of $3.12 per share and has a dividend yield of 2.1%. Zebra Technologies 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 Zebra Technologies and Illinois Tool Works’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zebra Technologies 3.08% 47.70% 9.38%
Illinois Tool Works 12.36% 51.79% 14.74%

Risk and Volatility

Zebra Technologies has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500. Comparatively, Illinois Tool Works has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500.

Valuation and Earnings

This table compares Zebra Technologies and Illinois Tool Works’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zebra Technologies $3.72 billion 2.24 $17.00 million $6.40 24.37
Illinois Tool Works $14.31 billion 3.52 $1.69 billion $6.59 22.56

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

Summary

Illinois Tool Works beats Zebra Technologies on 11 of the 18 factors compared between the two stocks.

Zebra Technologies Company Profile

With the unparalleled operational visibility Zebra provides, enterprises become as smart and connected as the world we live in. Real-time information – gleaned from visionary solutions including hardware, software and services – gives organizations the competitive edge they need to simplify operations, know more about their businesses and customers, and empower their mobile workers to succeed in today’s data-centric world.

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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