ITT has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 7.5% to $194.15 per share while the index has gained 10.9%.
Is now the time to buy ITT? Find out in our full research report, it’s free.
Why Is ITT a Good Business?
Playing a crucial role in the development of the first transatlantic television transmission in 1956, ITT (NYSE: ITT) provides motion and fluid handling equipment for various industries
1. Skyrocketing Revenue Shows Strong Momentum
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, ITT’s sales grew at an impressive 11% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.
2. Projected Revenue Growth Is Remarkable
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect ITT’s revenue to rise by 33.5%, an improvement versus its 11% annualized growth for the past five years. This projection is eye-popping and indicates its newer products and services will catalyze better top-line performance.
3. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, ITT’s margin expanded by 18 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability fell. ITT’s free cash flow margin for the trailing 12 months was 11.4%.
Final Judgment
These are just a few reasons ITT is a rock-solid business worth owning, but at $194.15 per share (or 23.2× forward P/E), is now the right time to buy the stock? See for yourself in our comprehensive research report, it’s free.
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