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ITT's Abundant Prospects a Boon, Persistent Risks a Bane

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ITT Inc. (ITT - Free Report) stands to gain from its presence in diverse end markets, which allows it to neutralize risks associated with a single market. In the quarters ahead, strength in industrial, aerospace & defense and chemical end markets coupled with auto market recovery and solid demand for connectors is likely to benefit ITT. For 2022, organic sales are predicted to grow 9-11% on a year-over-year basis.

ITT believes in strengthening its competency with innovation and growth investments. It has been investing in product innovation across its connectors, friction technologies and pump businesses. ITT unveiled the third generation of its i-ALERT Condition Monitoring Solution in May 2022. Also, its connector business launched its ruggedized, modular circular series Veam MOVE-MOD in November 2021. The buyout of Habonim in April 2022 will help ITT boost its offerings in cryogenic and hydrogen ball valve space apart from expanding into new end markets.

ITT focuses on rewarding its shareholders through dividend payments and share repurchases. In the first three months of 2022, ITT used $22.4 million for paying out dividends and buying back shares worth $186 million. Also, in February 2022, the quarterly dividend rate was hiked 20%.

However, ITT has been witnessing the negative impacts of escalating costs and expenses for a while. ITT’s cost of sales increased 8.2% on a year-over-year basis in first-quarter 2022. Also, its general and administrative expenses rose 4%, while sales and marketing expenses jumped 4.6%. Supply-chain constraints and higher raw material costs are likely to affect its margins and profitability over time.

Given its widespread presence, ITT’s performance is exposed to risks arising from geopolitical tensions, trade relations and adverse movements in foreign currencies. Forex woes hampered ITT’s sales 2.8% on a year-over-year basis in the first quarter. The performance of its overseas business might be depressed by a stronger U.S. dollar in the quarters ahead.

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In the past six months, the currently Zacks Rank #3 (Hold) player’s shares have lost 35.2% compared with the industry’s decline of 23.3%.

Stocks to Consider

Some better-ranked companies 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.

In the past 60 days, Griffon’s earnings estimates have increased 80.5% for fiscal 2022 (ending September 2022). The stock has declined 1.7% in the past six months.

Carlisle Companies Incorporated (CSL - Free Report) presently flaunts a Zacks Rank of 1. CSL delivered a trailing four-quarter earnings surprise of 23%, on average.

In the past 60 days, Carlisle’s earnings estimates have increased 10.7% for 2022. CSL’s shares have declined 3.4% in the past six months.

Nordson Corporation (NDSN - Free Report) presently carries a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 4.5%, on average.

In the past 60 days, NDSN’s earnings estimates have increased 3.1% for 2022. The stock has declined 20.9% in the past six months.

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