ITT Inc.’s (ITT - Analyst Report) Enidine brand recently announced that its proprietary vibration absorption technology will be deployed in Textron Inc.’s (TXT - Analyst Report) subsidiary, Bell Helicopter.
Bell 505 Jet Ranger X helicopter has LIVE units on it that will use ITT’s vibration absorption technology. ITT and aerospace manufacturer – Bell Helicopter – have collaborated to develop the LIVE units. The functionality of these units has been improved with ITT Enidine’s multi-modulus journal and spherical bearings. ITT’s state-of-the-art technology facilitates noise and vibration reduction, thus expanding the lifespan of rotorcraft components.
Last year, ITT declared the debut of rotorcraft products under Enidine brand on the first test flight of Bell Helicopter’s 525 Relentless. Now, the companies have extended their partnership to design a superior bearing technology, originally conceived in the 505 Jet Ranger X. These companies believe that development of the integrated LIVE units on the Bell 505 model will significantly boost customer comfort.
Aerospace Business: A Catalyst
Of late, ITT’s Control Technologies, which manages some of the company’s leading brands like Enidine, Turn-Act and Aerospace Controls, has been benefiting from favorable conditions in the aerospace and defense markets. This business segment is on a constant lookout to elevate its position in the infrastructure, energy, automation and aerospace markets.
Currently, this segment is focusing on expanding in the higher-margin aftermarket business by concentrating on low-cost technological solutions. It is steadily shifting several of its product lines to a low-cost region to optimize cost structure. We perceive that innovative technology, diligent restructuring efforts and favorable market trends will be conducive to the top-line performance of Control Technologies, going forward.
Macroeconomic Headwinds Thwarting Prospects
Despite a solid aerospace business, ITT has been grappling with a host of macroeconomic issues that are proving to be a major drag on the company’s performance. Especially, weak oil and gas prices as well as sluggish chemical markets have been posing a concern for the company. In addition, declining oil and gas prices have been hampering the pumps and connectors business, with increasing level of project delays and order cancellations by customers.
Oil and gas revenues, expected to represent 14% of 2016 revenues, will likely plummet 46% on a year-over-year basis in the second half. Decline in short-cycle upstream oil and gas connector business is estimated to aggravate slowdown in upstream business.
Moreover, an anticipated softness in midstream and downstream markets due to delayed project activities, pricing pressure and overall market uncertainty, add to the company’s woes. On account of these factors, the Zacks Rank #4 (Sell) company projects total revenue to be down in the range of 3–5% for 2016. Also, organic revenue is forecast to fall in the range of 7–9%.
Stocks to Consider
Some better-ranked stocks in the industry include Macquarie Infrastructure Corporation (MIC - Snapshot Report) and Raven Industries Inc. (RAVN - Analyst Report) , both of which carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Headquartered in Sioux Falls, SD, Raven Industries manufactures a variety of products for customers in the industrial, construction and military/aerospace markets. Per analysts, Raven is projected to generate earnings growth of 25.0% in the current fiscal year, compared to just 4.5% for the industry.
Macquarie owns, operates and invests in a diversified group of infrastructure businesses, which provide basic, everyday services, in the United States and other developed countries. Per analysts, the company is projected to generate earnings growth of 184.9% in the current fiscal year, compared to just 4.5% for the industry.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>