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ITT Beats on Q3 Earnings & Revenues, Revises 2018 View

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ITT Inc. (ITT - Free Report) reported better-than-expected results for third-quarter 2018.

Earnings/Revenues

Quarterly adjusted earnings came in at 82 cents per share, outpacing the Zacks Consensus Estimate of 79 cents. The bottom line also came in 24.2% higher than the year-ago tally.

Revenues in the reported quarter came in at $680.6 million, up 5.5% year over year. The top-line numbers also surpassed the Zacks Consensus Estimate of $671 million. Notably, the top line improved 7% year over year on an organic basis.

Segmental Break-Up

Third-quarter 2018 revenues of the company’s Industrial Process segment were $205 million, up 4.5% year over year. Quarterly revenues of the company’s Motion Technologies segment improved 3.4% year over year to $310.3 million. Connect & Control Technologies segment generated $166 million revenues in the reported quarter, up 11.1% year over year. 

ITT Inc. Price, Consensus and EPS Surprise

 

ITT Inc. Price, Consensus and EPS Surprise | ITT Inc. Quote

Costs/Margins

Cost of sales in the third quarter was $454.1 million, up 2.9% year over year. Gross profit margin was 33.3%, up 170 basis points (bps) year over year.

Sales and marketing expenses in the quarter came in at $40.8 million compared with $41.3 million recorded in the year-ago quarter. Adjusted operating margin improved 150 bps year over year to 15.7%.

Balance Sheet/ Cash Flow

Exiting the third quarter, ITT had cash and cash equivalents of $525.8 million, up from $389.8 million recorded as of Dec 31, 2017.

In the first nine months of 2018, the company generated $246.6 million cash from operating activities, higher than $178.3 million cash generated in the year-ago period. Free cash flow was $182.8 million, remarkably up from $99.1 million recorded during the first nine months of 2017.

Outlook

ITT is poised to grow on the back of robust end-market sales and greater operational efficacy. Nonetheless, foreign exchange pressures, escalating compensation costs and material price inflation remain causes of concern for the company. Based on the existing market conditions, this Zacks Rank #3 (Hold) company has revised its organic revenue growth guidance for 2018 from 3-5% to 4-5%. Moreover, adjusted earnings view for the year has also been revised from $3.05-$3.15 per share to $3.13-$3.15 per share.

Stocks to Consider

Some better-ranked stocks in the same space are listed below:

Macquarie Infrastructure Company (MIC - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The company pulled off a positive average earnings surprise of 3.85% in the past four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Crane Company (CR - Free Report) holds a Zacks Rank #2 (Buy). The company generated a positive average earnings surprise of 5.04% in the trailing four quarters.

Applied Industrial Technologies, Inc. (AIT - Free Report) also carries a Zacks Rank of 2. The company delivered positive average earnings surprise of 11.67% during the same time period.

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