ITT Stock Exhibits Strong Prospects Despite Persisting Headwinds

ITT Corporation ITT is poised to gain from strength across its segments. The Industrial Process (IP) segment is benefiting from solid momentum in the short-cycle business within the energy and industrial markets. Growth in demand for parts, services and valves is aiding the segment. The acquisition of Svanehøj also bodes well for the IP segment. An increase in component and connector sales within the defense and industrial markets is supporting the Connect and Control Technologies (CCT) segment. Also, the acquisition of kSARIA augurs well for the segment. Strong demand for the company’s brake components and specialized sealing solutions, shock absorbers and damping technologies in OEM and rail transportation markets is likely to drive the Motion Technologies (MT) segment’s performance in the quarters ahead.

ITT solidified its product portfolio and leveraged business opportunities through asset additions. Acquisitions contributed 6.3% to the company’s sales in first-quarter 2025. In September 2024, ITT acquired kSARIA Parent, Inc. The acquisition enhanced its portfolio of connectivity solutions for the defense and aerospace end markets, technological capabilities and market reach, driving growth and operational efficiency. The January 2024 acquisition of privately held Svanehøj Group A/S (Svanehøj) expanded ITT’s offerings, particularly in the marine pumps market. The acquisition of Micro-Mode Products, Inc. in May 2023 boosted the company's product portfolio and customer base, specifically for long-term defense programs. It also grew its North America connectors platform, enhancing the CCT segment.

ITT is committed to rewarding its shareholders through dividends and share repurchases. During the first quarter of 2025, the company paid out dividends of $28.7 million and repurchased shares worth $100 million. The quarterly dividend rate was hiked by 10% in February 2025.

Price Performance of ITT

In the past year, this Zacks Rank #3 (Hold) company has gained 21.6% compared with the industry’s 6% growth.

Downsides of ITT

However, the company has been dealing with the negative impact of high operating costs and expenses over time. In 2024, its cost of sales recorded a year-over-year increase of 9.6% due to rising raw material and labor costs. Also, the company's sales and marketing expenses rose 18.2% year over year in the same period due to increasing personnel and other sales-related costs. The trend continued in first-quarter 2025, with sales and marketing expenses rising 6.2% and general and administrative expenses increasing 19.3% year over year.

Given its substantial international operations, foreign-currency woes are also likely to hurt its top line in the quarters ahead. For instance, in the first quarter, foreign currency translation reduced revenues by $16 million.

Stocks to Consider

Some better-ranked companies are discussed below:

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Federal Signal Corporation FSS currently carries a Zacks Rank #2 (Buy). FSS delivered a trailing four-quarter average earnings surprise of 6.4%.

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This article originally published on Zacks Investment Research (zacks.com).

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