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Shares of ITT Corporation (ITT - Analyst Report) hit a 52-week high of $41.88 during yesterday’s trading session. However, the stock closed at $41.29, reflecting a solid year-to-date return of 69.9%. The average trading volume for the last three months aggregated 586,505 shares.

ITT Corporation delivered positive earnings surprises in the last four quarters with an average beat of 9.4%. This Zacks Rank #2 (Buy) stock has a market cap of $3.8 billion and long-term earnings growth expectations of 13.0%.

Growth Drivers

ITT Corporation has a strong balance sheet and generates a substantial cash flow. In the last reported quarter, the company reported a strong top-line and bottom line driven by higher revenues across its businesses and regions. In addition, the company’s strong performance in high-growth energy, transportation and industrial end markets were some of the catalysts driving the stock.

On Nov 11, ITT Corporation reported strong third quarter 2013 results with earnings increasing 11.1% year over year, primarily driven by gains in key geographies and strategic end market. The company’s top-line also rose 15.8% year over year.

The company witnessed volume growth, higher backlogs and superior performances across most of the end markets including a 56% growth in energy, 14% growth in transportation and 1% growth in Industrial. In addition, the company maintains a sound and flexible balance sheet with ample liquidity that enables it to capitalize on potential acquisition opportunities to fuel its top-line growth. ITT Corporation has a pristine balance sheet, with more than $480.6 million in cash & cash equivalents and no long-term debt.

Driven by strong top-line growth in the second quarter, management increased its earnings per share guidance for fiscal 2013. Earnings are expected to be in the range of $1.97 to $2.00, against $1.86 to $1.92 per share anticipated earlier. Total revenue is expected to grow 11% to 12% compared to earlier expectations of 10% to 11%. Organic revenues are expected to grow in the range of 5% to 6% from 3% to 4% mentioned earlier. 

Increased guidance is driven by growth in the oil and gas, chemical and industrial markets, share gains in the global automotive market, the impact of the Bornemann Pumps acquisition and emerging market growth, partially offset by weakness in the mining and defense end markets.

Estimate Revisions

Over the last 7 days, the earnings estimates did not have any upward or downward revision for 2013. Although there is a lacuna of estimate revisions, we envision an uptrend for the stock backed by its strong growth potential.

Other Stocks to Consider

Some other stocks operating in the same sector with favorable Zacks Ranks include CLARCOR Inc. (CLC - Snapshot Report), Hutchison Whampoa Limited (HUWHY) and Rexnord Corporation (RXN - Analyst Report). All three stocks carry Zacks Rank #2 (Buy).

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