7 Reasons Why Investors Should Invest in ITT Stock Now
ITT Inc. ITT is benefiting from strength in the end markets like industrial, aerospace and defense. Higher sales volume and robust order growth are also driving the company’s growth.
Let’s delve into the factors, which make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.
Segmental Strength: The company’s Industrial Process segment is benefiting from increasing number of projects. Robust demand for parts and services in the aftermarket business also bodes well for the segment. Strengthening aero components and defense businesses are aiding the Connect and Control Technologies (CCT) segment. Friction OE (original equipment) on time delivery and accretive pricing actions are driving growth for the Motion Technologies (MT) segment.
Acquisition Benefits: ITT’s expansion initiatives are expected to drive its growth. The acquisition of Micro-Mode Products, Inc. in May 2023 enhanced ITT's product portfolio and customer base, specifically for long-term defense programs. The addition of Micro-Mode grew ITT's existing North America connectors platform, which is a part of its CCT segment. ITT acquired Clippard Instrument Laboratories’ product lines in August 2022. With product lines of stainless steel, brass and aluminum cylinders, and volume tanks, the acquisition expands ITT’s Compact Automation product offering in the robotics, packaging and automation end markets.
Innovation Initiatives: The company intends to become more competent on the back of innovation investments. It has been investing in product innovation across its friction technologies, connectors and pump businesses for a while. For instance, in June 2023, the company made an initial investment of €50 million ($54.49 million) to expand a Friction manufacturing facility in Termoli, Italy, and to enhance the research and development competence in Barge, Italy. With this investment, ITT is likely to boost its position in the brake pad market for luxury and sporting vehicles.
Business Strength: ITT is likely to benefit from its focus on fulfilling customers’ needs, operational execution, and innovation and growth investments. In the first six months of 2023 its organic orders grew 10% year over year, driven by the strong demand in IP’s aftermarket business and CCT’s aero and defense components and industrial connectors’ demand. For 2023, the company’s organic sales are expected to grow approximately 6-8% year over year. In the long run, a robust backlog in its businesses, supported by the recovery in the energy end market, is expected to boost its performance.
Rewards to Shareholders: ITT is committed to handsomely rewarding its shareholders through share buybacks and dividend payments. In the first six months of 2023, dividend payment totaled $48.1 million and share repurchases were $60 million. In 2022, the company bought back shares worth $245.3 million and paid out dividends of $87.9 million. The quarterly dividend rate was hiked by 10% in February 2023.
Northbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for ITT’s 2023 earnings has been revised 3.2% upward.
Price Performance: Shares of ITT have risen 38.9% in a year against the industry‘s 0.7% decline.
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