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Morningstar’s Analysis

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No Material Surprises in ITT’s Results, as We Maintain Fair Value

Joshua Aguilar Equity Analyst

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.

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Company Profile

Business Description

ITT is a diversified industrial conglomerate with nearly $3 billion in sales. After the spin-offs of Xylem and Exelis in 2011, the company’s products primarily include brake pads, shock absorbers, pumps, valves, connectors, and switches. Its customers include original-equipment and Tier 1 manufacturers as well as aftermarket customers. ITT uses a network of approximately 700 independent distributors, which accounts for about one third of overall revenue. Nearly three fourths of the company’s sales are made in North America and Europe. ITT’s primary end markets include automotive, rail, oil and gas, aerospace and defense, chemical, mining, and general industrial.

1133 Westchester Avenue
White Plains, NY, 10604
T +1 914 641-2000
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 9,700