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ITT to Gain From Business Strength & Investments Amid Risks

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ITT Inc. ITT is poised to benefit from its presence in diverse end markets that enables it to neutralize the risks associated with a single market with strength across others. Strength across the company’s Friction technologies and Connectors businesses and the broader auto market recovery are likely to drive its performance in the quarters ahead. For 2021, it anticipates generating organic sales growth of 8-10% on a year-over-year basis.

The company focuses on enhancing its competency through innovation investments. With the launch of automated machine health diagnostics products, the company boosted its wireless condition monitoring offerings. ITT has also been investing in its pump business and key markets, including electric vehicles. Several other investments made by the company, including the upgrade of ITT Smart Pad and expanding manufacturing automation capabilities at friction technologies business, bode well.

ITT’s policy of rewarding shareholders handsomely through share buybacks and dividend payments will work in its favor. In the first nine months of 2021, it paid out dividends worth $57 million and repurchased shares worth $111.7 million. It increased the quarterly dividend rate by 30% in February 2021.

However, escalating costs and expenses weigh on the company. In third-quarter 2021, its cost of sales increased 16.7%, and general and administrative expenses rose 18.7% on a year-over-year basis. Its sales and marketing expenses recorded an increase of 12%. Also, high capital expenditure might affect its short-term liquidity. For 2021, it expects capital expenditure of $100 million.

Of late, the company has been witnessing supply-chain constraints and raw-material inflation. It expects higher raw material costs to adversely impact its margins and profitability in the near term.

Zacks Investment Research
Zacks Investment Research

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The Zacks Rank #3 (Hold) company’s shares have gained 11.4% against the 4% decline recorded by the industry in the past three months.

Key Picks

Some better-ranked companies are discussed below.

SPX FLOW, Inc. FLOW presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Its earnings surprise in the last four quarters was 40.42%, on average.

In the past 60 days, SPX FLOW’s earnings estimates have increased 23.5% for 2022. FLOW’s shares have gained 19.1% in the past three months.

Carlisle Companies Incorporated CSL presently carries a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 38.89%, on average.

In the past 60 days, Carlisle’s earnings estimates have increased 1% for 2022. CSL’s shares have gained 16.7% in the past three months.

Danaher Corporation DHR presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 24.05%, on average.

Danaher’s earnings estimates have increased 1.8% for 2022 in the past 60 days. DHR’s shares have lost 1.1% in the past three months.

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ITT Inc. (ITT) : Free Stock Analysis Report

Carlisle Companies Incorporated (CSL) : Free Stock Analysis Report

SPX FLOW, Inc. (FLOW) : Free Stock Analysis Report

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