ITT Inc. ITT has been benefiting from the strong demand for its short-cycle product categories, driven by strength in pump projects and the Habonim valves business. Solid momentum in the aftermarket business, along with the acquisition of Svanehøj, is driving the Industrial Process segment.

Growth in component and connector sales within the aerospace and defense markets is aiding the Connect and Control Technologies segment. Also, the acquisitions of kSARIA and Micro-Mode augur well for the segment. In third-quarter 2024, revenues from Industrial Process and Connect and Control Technologies segments increased 19.3% and 12.6%, respectively.

The company intends to strengthen and expand its businesses through acquisitions. In September 2024, ITT acquired kSARIA Parent, Inc. The acquisition will enhance its portfolio of connectivity solutions for the defense and aerospace end markets, technological capabilities and market reach, thereby driving growth and operational efficiency.

Also, in January 2024, it acquired Svanehøj for approximately $395 million. The inclusion of Svanehøj’s portfolio of highly engineered flow solutions expanded its customer offerings and boosted its position in the marine pumps industry. The acquisitions of Svanehøj and kSARIA contributed 7% to the company’s sales growth in third-quarter 2024.

ITT remains committed to increasing shareholders’ value through dividend payments and share repurchases. For instance, during the first nine months of 2024, ITT paid out dividends of $78.7 million and repurchased shares worth $104 million. Also, 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.

ITT’s Price Performance

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In the past three months, this Zacks Rank #3 (Hold) company has gained 15% against the industry’s 9.9% decline.

However, the company has been subject to high operating costs and expenses over time. For instance, in the first nine months of 2024, the cost of sales rose 8.5% year over year. While sales and marketing expenses rose 15% year over year in the same period, general and administrative expenses increased 5.7%. High costs and expenses, if not controlled, are likely to affect its margins and profitability in the coming quarters.

Given its substantial international operations, foreign-currency woes are also likely to hurt its top line in the quarters ahead. For instance, in the third quarter, foreign currency translation had an adverse impact of 0.2% on sales.

Key Picks

Some better-ranked stocks from the same space are presented below.

Federal Signal Corporation FSS presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FSS delivered a trailing four-quarter average earnings surprise of 11.8%. In the past 60 days, the Zacks Consensus Estimate for Federal Signal’s 2024 earnings has increased 3.1%.

PDD Holdings Inc. PDD has a Zacks Rank of 2 currently. PDD delivered a trailing four-quarter average earnings surprise of 41.1%. In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 0.5%.

RBC Bearings Incorporated RBC presently carries a Zacks Rank of 2. RBC delivered a trailing four-quarter average earnings surprise of 2.5%. In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 2.2%.

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