Analyst Note| Joshua Aguilar |
Nothing in narrow-moat ITT’s second-quarter results alters our long-term view of the firm. Both revenue and core segment operating margins came in slightly below our expectations for the quarter, given the difficult operating environment. Even so, management raised both its organic top line by 3% at the midpoint calling for 9% full-year 2021 growth, and its adjusted EPS by nearly $0.08 at the midpoint of nearly $3.98. After seasonally adjusting figures, checking against order rates and backlog (though most of ITT’s recovery is in its short-cycle businesses), and accounting for management’s commentary regarding the supply-chain disruptions, we find the guidance reasonable.