Since November 2024, ITT has been in a holding pattern, posting a small loss of 2.7% while floating around $149.41.

Is now the time to buy ITT? Find out in our full research report, it’s free.

Why Does ITT Spark Debate?

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

Two Things to Like:

1. Operating Margin Rising, Profits Up

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Looking at the trend in its profitability, ITT’s operating margin rose by 9.6 percentage points over the last five years, as its sales growth gave it operating leverage. Its operating margin for the trailing 12 months was 18.7%.ITT Trailing 12-Month Operating Margin (GAAP)

2. Stellar ROIC Showcases Lucrative Growth Opportunities

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

ITT’s five-year average ROIC was 17.5%, beating other industrials companies by a wide margin. This illustrates its management team’s ability to invest in attractive growth opportunities and produce tangible results for shareholders.ITT Trailing 12-Month Return On Invested Capital

One Reason to be Careful:

Slow Organic Growth Suggests Waning Demand In Core Business

In addition to reported revenue, organic revenue is a useful data point for analyzing Gas and Liquid Handling companies. This metric gives visibility into ITT’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, ITT’s organic revenue averaged 6.1% year-on-year growth. This performance slightly lagged the sector and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations.ITT Organic Revenue Growth

Final Judgment

ITT has huge potential even though it has some open questions, but at $149.41 per share (or 22.9× 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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