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ITT Gains From End-Market Strength & Buyouts Amid Headwinds
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ITT Inc. (ITT - Free Report) has been benefiting from solid momentum in its aftermarket business, driven by robust demand for parts and services. A strong pipeline of projects in energy, mining and decarbonization markets, including a new contract with ExxonMobil, bode well for the Industrial Process segment.
Growth in component sales within the commercial aerospace and defense markets has been driving the Connect & Control Technologies segment. Also, solid momentum in the friction OE (original equipment) business is supporting the Motion Technologies unit.
The company intends to strengthen and expand its businesses through acquisitions. In January 2024, it acquired Svanehøj for approximately $395 million. The inclusion of Svanehøj’s portfolio of highly engineered flow solutions enables ITT to expand its customer offerings and boost its position in the marine pumps industry. For 2024, ITT expects to generate about $160 million of revenue from Svanehøj.
Also, the acquisition of Micro-Mode Products in May 2023 enhanced its product portfolio and customer base, specifically for long-term defense programs.
ITT remains committed to increasing shareholders’ value through dividend payments and share repurchases. For instance, in 2023, it paid dividends of $95.8 million and repurchased shares worth $60 million. The quarterly dividend rate was hiked by 10% in February 2024.
Image Source: Zacks Investment Research
In the past three months, this Zacks Rank #3 (Hold) company has gained 10.5% compared with the industry’s 7.1% growth.
However, the company has been subject to persistent softness in the global auto market. ITT expects soft global auto production to affect its Motion Technologies segment’s performance in the near term.
ITT has been grappling with the impacts of the high cost of sales. In 2023, its cost of sales recorded a year-over-year increase of 5.4% due to increasing raw material and labor costs. In the year, ITT’s general and administrative expenses increased 39% year over year, while sales and marketing expenses rose 10.8%. High operating costs and expenses, if not controlled, might affect its margins and profitability in the coming quarters.
Stocks to Consider
Some better-ranked companies from the same space are discussed below.
It has a trailing four-quarter average earnings surprise of 42%. The Zacks Consensus Estimate for GFF’s fiscal 2024 earnings has increased 3.9% in the past 60 days.
Carlisle Companies Incorporated (CSL - Free Report) currently flaunts a Zacks Rank #1. CSL delivered a trailing four-quarter average earnings surprise of 7.6%. In the past 60 days, the Zacks Consensus Estimate for CSL’s 2024 earnings has increased 8.2%.
Vector Group Ltd (VGR - Free Report) currently sports a Zacks Rank #1. It delivered a trailing four-quarter average earnings surprise of 10.2%. In the past 60 days, the consensus estimate for VGR’s 2024 earnings has improved 6.9%.
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ITT Gains From End-Market Strength & Buyouts Amid Headwinds
ITT Inc. (ITT - Free Report) has been benefiting from solid momentum in its aftermarket business, driven by robust demand for parts and services. A strong pipeline of projects in energy, mining and decarbonization markets, including a new contract with ExxonMobil, bode well for the Industrial Process segment.
Growth in component sales within the commercial aerospace and defense markets has been driving the Connect & Control Technologies segment. Also, solid momentum in the friction OE (original equipment) business is supporting the Motion Technologies unit.
The company intends to strengthen and expand its businesses through acquisitions. In January 2024, it acquired Svanehøj for approximately $395 million. The inclusion of Svanehøj’s portfolio of highly engineered flow solutions enables ITT to expand its customer offerings and boost its position in the marine pumps industry. For 2024, ITT expects to generate about $160 million of revenue from Svanehøj.
Also, the acquisition of Micro-Mode Products in May 2023 enhanced its product portfolio and customer base, specifically for long-term defense programs.
ITT remains committed to increasing shareholders’ value through dividend payments and share repurchases. For instance, in 2023, it paid dividends of $95.8 million and repurchased shares worth $60 million. The quarterly dividend rate was hiked by 10% in February 2024.
Image Source: Zacks Investment Research
In the past three months, this Zacks Rank #3 (Hold) company has gained 10.5% compared with the industry’s 7.1% growth.
However, the company has been subject to persistent softness in the global auto market. ITT expects soft global auto production to affect its Motion Technologies segment’s performance in the near term.
ITT has been grappling with the impacts of the high cost of sales. In 2023, its cost of sales recorded a year-over-year increase of 5.4% due to increasing raw material and labor costs. In the year, ITT’s general and administrative expenses increased 39% year over year, while sales and marketing expenses rose 10.8%. High operating costs and expenses, if not controlled, might affect its margins and profitability in the coming quarters.
Stocks to Consider
Some better-ranked companies from the same space are discussed below.
Griffon Corporation (GFF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
It has a trailing four-quarter average earnings surprise of 42%. The Zacks Consensus Estimate for GFF’s fiscal 2024 earnings has increased 3.9% in the past 60 days.
Carlisle Companies Incorporated (CSL - Free Report) currently flaunts a Zacks Rank #1. CSL delivered a trailing four-quarter average earnings surprise of 7.6%. In the past 60 days, the Zacks Consensus Estimate for CSL’s 2024 earnings has increased 8.2%.
Vector Group Ltd (VGR - Free Report) currently sports a Zacks Rank #1. It delivered a trailing four-quarter average earnings surprise of 10.2%. In the past 60 days, the consensus estimate for VGR’s 2024 earnings has improved 6.9%.