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ITT Share Price Increases 46% YTD: What's Driving the Rally?

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Price performance of ITT Inc. ITT has been impressive since the beginning of 2019, which is evident from a 46.1% increase in its share price. Solid financial performance, healthy fundamentals and growth opportunities supported positive market sentiments for the company.

The New York City-based company, with $6.2 billion of market capitalization, belongs to the Zacks Diversified Operations industry. The conglomerate currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Year to date, ITT has outperformed its industry’s growth of 28% and the S&P 500’s rally of 24%.

Factors Driving the Stock

So far in 2019, ITT has reported results for four quarters, including the fourth quarter of 2018 and the first three quarters of 2019. The results were better than expected on all occasions. It has a positive earnings surprise of 7.85%, on average, for the trailing four quarters. Impressive financial performances so far must have driven the rally in the company’s share price.

Notably, its earnings in the last reported quarter surpassed the Zacks Consensus Estimate by 7.78%, while sales beat the same by 0.4%. Organic sales improved, driven by strength across major end markets like chemical, rail, auto friction and aerospace.

The company is gaining from the solid product portfolio — including Goulds Pumps, Bornemann, Friction Technologies, KONI and others — and investments in innovation. Also, its focus on the commercialization of market-leading technologies is boon. In addition, shareholder-friendly policies raise the stock’s attractiveness. Dividend payment and share buybacks are popular ways of boosting stakeholders’ wealth.

The acquisitive nature of ITT has been boosting growth as well. In the first nine months of 2019, the company invested $113.1 million in acquisitions. ITT acquired Rheinhutte Pumpen Group in May 2019. The buyout has been strengthening ITT’s Industrial Process segment’s portfolio of engineered industrial pump technologies. Moreover, ITT added Matrix Composites to its portfolio in July 2019, strengthening prospects of its Connect and Control Technologies segment’s aerospace product offerings.

ITT anticipates benefiting from an increase in sales volume, operational execution, cost containment and supply-chain actions for the rest of 2019. It predicts organic sales growth of 3-5% and adjusted earnings of $3.73-$3.75 for the year, higher than the previously mentioned $3.58-$3.68.

Currently, the Zacks Consensus Estimate for ITT’s earnings is pegged at $3.72 for 2019 and $3.98 for 2020, marking growth of 3% and 3.4% from the respective 30-day-ago figures. Such positive revisions in earnings estimates are reflective of positive sentiments for the company.

ITT Inc. Price and Consensus


ITT Inc. Price and Consensus

ITT Inc. price-consensus-chart | ITT Inc. Quote

ITT’s Performance Versus Three Peers

The company has outperformed many peers so far in 2019. Three such stocks are Danaher Corporation DHR, United Technologies Corporation and Macquarie Infrastructure Company MIC, with respective year-to-date gains of 42.2%, 39.8% and 15.3%.

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