U.S. Markets closed

ITT Corp. Reaches 52-Week High

Zacks Equity Research

Shares of ITT Corporation (ITT) hit a new 52-week high of $43.58 during yesterday’s trading session. However, the stock closed at $43.50, reflecting a solid year-to-date return of 78.9%. Its average trading volume for the last three months aggregated 730,331 shares.

ITT Corporation delivered positive earnings surprises in the last four quarters with an average beat of 9.4%. This Zacks Rank #2 (Buy) stock has a market cap of $3.95 billion and long-term earnings growth expectations of 12.6%.

Growth Drivers

ITT Corporation has a strong balance sheet and generates substantial cash flow. In the last reported quarter, the company witnessed a solid top line and bottom line, driven by higher revenues across its businesses and regions. In addition, the company’s strong performance in the high-growth energy, transportation and industrial end markets were some of the catalysts driving the stock.

On Nov 11, ITT Corporation reported impressive third-quarter 2013 results with earnings increasing 11.1% year over year, primarily driven by gains in key geographies and strategic end market. The company’s top line also rose 15.8% year over year.

ITT Corp. witnessed volume growth, higher backlogs and superior performances across most end markets including a 56% growth in energy, 14% growth in transportation and 1% growth in Industrial. In addition, the company maintains a sound and flexible balance sheet with ample liquidity that enables it to  capitalize on potential acquisition opportunities to fuel its top-line growth. ITT Corporation has a pristine balance sheet, comprises $480.6 million in cash and cash equivalents and no long-term debt.

Driven by strong top-line growth in the second quarter, management increased its earnings per share guidance for fiscal 2013. Earnings are expected in the range of $1.97 to $2.00, against $1.86 to $1.92 per share anticipated earlier. Total revenue is estimated to grow 11% to 12% compared to earlier expectations of 10% to 11%. Organic revenues are predicted to grow in the range of 5% to 6% versus the earlier band of 3% to 4%.

Increased guidance is driven by growth in the oil and gas, chemical and industrial markets; share gains in the global automotive market; the impact of the Bornemann Pumps acquisition and emerging market growth. But these were partially offset by weakness in the mining and defense end markets.

Estimate Revisions

Over the last 60 days, the earnings estimates for fiscal 2013 and 2014 have been revised upwards. Therefore, we envision an uptrend for the stock backed by its strong growth potential with estimates rising by 4.2% to $2.00 for 2013 and by 2.7% to $2.30 for 2014.

Other Stocks to Consider

Some other stocks operating in the same sector with favorable Zacks Ranks include CLARCOR Inc. (CLC), Carlisle Companies Inc. (CSL) and Raven Industries Inc. (RAVN). All these stocks carry Zacks Rank #2 (Buy).

Read the Full Research Report on ITT
Read the Full Research Report on RAVN
Read the Full Research Report on CLC
Read the Full Research Report on CSL

Zacks Investment Research