ITT Gains More Than 38% in a Year: Will the Growth Continue?
ITT Inc. ITT appears in good shape, with its shares having rallied 38.7% in a year, outperforming the industry’s 1.8% increase.
What’s Aiding ITT?
Strength in the aftermarket business, driven by robust energy and mining markets, is supporting the company’s Industrial Process segment. Increasing demand in the chemical and energy markets also bodes well for the segment. Growth in component sales within the aerospace and defense markets is driving the Connect and Control Technologies (CCT) segment. Solid momentum in the friction original equipment business is driving growth for the Motion Technologies segment.
ITT’s measures to expand its operations through asset additions support its top-line growth. In May 2023, the company acquired Micro-Mode Products, Inc., which enhanced ITT's product portfolio and customer base, specifically for long-term defense programs. The addition of Micro-Mode grew ITT's existing North American connectors platform, which is part of its CCT segment.
The company 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.
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ITT 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.
The company utilizes its cash flow to reward its shareholders through dividend payouts and share repurchases. In the first nine months of 2023, dividend payments totaled $71.9 million and share repurchases were $60 million. The quarterly dividend rate was hiked by 10% in February 2023.
Will the Uptrend in Shares Last?
Though the company is facing challenges due to increasing costs of sales, strength in the end markets like industrial, aerospace and defense is likely to aid ITT’s growth. Also, the company is likely to benefit from its focus on fulfilling customers’ needs, operational execution, and innovation and growth investments in the quarters ahead.
Zacks Rank and Other Stocks to Consider
ITT currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the same space are discussed below:
Federal Signal Corporation FSS presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
FSS delivered a trailing four-quarter average earnings surprise of 8.1%. In the past 60 days, the Zacks Consensus Estimate for Federal Signal’s 2023 earnings has increased 2.5%. The stock has risen 55.4% in the past year.
Griffon Corporation GFF presently sports a Zacks Rank of 1. It has a trailing four-quarter average earnings surprise of 28.6%.
The Zacks Consensus Estimate for GFF’s fiscal 2024 earnings has increased 13% in the past 60 days. Shares of Griffon have jumped 57.3% in the past year.
Carlisle Companies Incorporated CSL currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 2.9%.
In the past 60 days, the Zacks Consensus Estimate for Carlisle’s 2023 earnings has remained steady. The stock has risen 26.6% in the past year.
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ITT Inc. (ITT) : Free Stock Analysis Report
Carlisle Companies Incorporated (CSL) : Free Stock Analysis Report
Federal Signal Corporation (FSS) : Free Stock Analysis Report
Griffon Corporation (GFF) : Free Stock Analysis Report
