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ITT Gains From Solid End Markets & Habonim Buyout Amid Risks
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ITT Inc. (ITT - Free Report) has been gaining from its diversified business structure that enables it to mitigate the adverse impacts of weakness in one end market with strength across others. Solid momentum across the company’s chemical, industrial and aerospace & defense end markets, auto market recovery and solid demand for connectors are likely to boost its revenues in the coming quarters. ITT anticipates its organic sales to grow 9-11% on a year-over-year basis in 2022.
The company intends to improve its competency with innovation and growth investments. It has been investing in product innovation across its friction technologies, connectors and pump businesses. In May 2022, ITT launched the third generation of its i-ALERT Condition Monitoring Solution. In November 2021, ITT’s connector business unveiled its ruggedized, modular circular series, Veam MOVE-MOD. Also, its acquisition of Habonim (April 2022) will help it boost its offerings in cryogenic and hydrogen ball valve space apart from expanding into new end markets.
It remains committed to rewarding shareholders through dividend payouts and share buybacks. In the first quarter of 2022, the company paid out dividends worth $22.4 million and repurchased shares worth $186 million. Also, the quarterly dividend rate was hiked by 20% in February 2022.
However, ITT has been dealing with the adverse impacts of increasing cost of sales and operating expenses. In first-quarter 2022, its cost of sales increased 8.2% on a year-over-year basis. Also, its general and administrative expenses jumped 4%, while sales and marketing expenses rose 4.6%. For 2022, supply-chain constraints and higher raw material costs are likely to affect its margins and profitability.
The company’s high capital expenditure might also hurt its short-term liquidity. For 2022, it expects to incur capital expenditure of $155 million, suggesting a year-over-year increase of 75%.
Image Source: Zacks Investment Research
In the past month, the Zacks Rank #3 (Hold) company’s shares have lost 6.6% compared with the industry’s decline of 8%.
Stocks to Consider
Some better-ranked companies from the same space are discussed below.
In the past 60 days, Griffon’s earnings estimates have increased 40% for fiscal 2022 (ending September 2022). The stock has surged 57.9% in the past month.
Carlisle Companies Incorporated (CSL - Free Report) presently flaunts a Zacks Rank of 1. Its earnings surprise in the last four quarters was 23%, on average.
In the past 60 days, Carlisle’s earnings estimates have increased 22.6% for 2022. CSL’s shares have lost 2.4% in the past month.
3M Company (MMM - Free Report) presently has a Zacks Rank of 2 (Buy). Its earnings surprise in the last four quarters was 13.8%, on average.
In the past 60 days, 3M’s earnings estimates have increased 5.1% for 2022. MMM’s shares have lost 3.2% in the past month.
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ITT Gains From Solid End Markets & Habonim Buyout Amid Risks
ITT Inc. (ITT - Free Report) has been gaining from its diversified business structure that enables it to mitigate the adverse impacts of weakness in one end market with strength across others. Solid momentum across the company’s chemical, industrial and aerospace & defense end markets, auto market recovery and solid demand for connectors are likely to boost its revenues in the coming quarters. ITT anticipates its organic sales to grow 9-11% on a year-over-year basis in 2022.
The company intends to improve its competency with innovation and growth investments. It has been investing in product innovation across its friction technologies, connectors and pump businesses. In May 2022, ITT launched the third generation of its i-ALERT Condition Monitoring Solution. In November 2021, ITT’s connector business unveiled its ruggedized, modular circular series, Veam MOVE-MOD. Also, its acquisition of Habonim (April 2022) will help it boost its offerings in cryogenic and hydrogen ball valve space apart from expanding into new end markets.
It remains committed to rewarding shareholders through dividend payouts and share buybacks. In the first quarter of 2022, the company paid out dividends worth $22.4 million and repurchased shares worth $186 million. Also, the quarterly dividend rate was hiked by 20% in February 2022.
However, ITT has been dealing with the adverse impacts of increasing cost of sales and operating expenses. In first-quarter 2022, its cost of sales increased 8.2% on a year-over-year basis. Also, its general and administrative expenses jumped 4%, while sales and marketing expenses rose 4.6%. For 2022, supply-chain constraints and higher raw material costs are likely to affect its margins and profitability.
The company’s high capital expenditure might also hurt its short-term liquidity. For 2022, it expects to incur capital expenditure of $155 million, suggesting a year-over-year increase of 75%.
Image Source: Zacks Investment Research
In the past month, the Zacks Rank #3 (Hold) company’s shares have lost 6.6% compared with the industry’s decline of 8%.
Stocks to Consider
Some better-ranked companies from the same space are discussed below.
Griffon Corporation (GFF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). GFF’s earnings surprise in the last four quarters was 97%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, Griffon’s earnings estimates have increased 40% for fiscal 2022 (ending September 2022). The stock has surged 57.9% in the past month.
Carlisle Companies Incorporated (CSL - Free Report) presently flaunts a Zacks Rank of 1. Its earnings surprise in the last four quarters was 23%, on average.
In the past 60 days, Carlisle’s earnings estimates have increased 22.6% for 2022. CSL’s shares have lost 2.4% in the past month.
3M Company (MMM - Free Report) presently has a Zacks Rank of 2 (Buy). Its earnings surprise in the last four quarters was 13.8%, on average.
In the past 60 days, 3M’s earnings estimates have increased 5.1% for 2022. MMM’s shares have lost 3.2% in the past month.