What ITT’s recent share move may signal for investors

ITT Inc. (ITT) shares have pulled back around 10% over the past month after earlier strength in the past 3 months, giving investors a chance to reassess the company’s fundamentals.

Despite the recent 1 month share price decline of around 10%, ITT’s 1 year total shareholder return of 39.29% and 3 year total shareholder return of 126.60% suggest longer term investors have seen much stronger gains.

If this pullback has you thinking about where else capital goods trends could lead, it might be worth scanning our 23 power grid technology and infrastructure stocks as a starting point for other ideas.

With ITT posting revenue of US$3.9b and net income of US$488.1m, plus an intrinsic value estimate and analyst target both above the current US$186.31 share price, you have to ask: is there still a buying opportunity here, or is the market already pricing in future growth?

Most Popular Narrative: 20% Undervalued

With ITT closing at $186.31 against a narrative fair value of $233, the current price sits below what the most widely followed model suggests.

Expansion of high-margin aftermarket and services business, along with new technologies (geopolymer brake pads, advanced fuel pumps, digital monitoring), positions ITT to benefit from industry digitalization and energy efficiency standards, supporting margin expansion and stable, recurring earnings streams.

Curious what has to happen for that higher value to stack up? Revenue and earnings are both expected to shift, along with the profit multiple. The mix of growth, margins, and discount rate assumptions is what really drives that $233 figure.

Result: Fair Value of $233 (UNDERVALUED)

However, you still need to weigh up execution risk on larger deals like SPX, as well as the possibility that project based revenue or acquisitions do not deliver as expected.

Next Steps

If this all sounds optimistic to you, act while the data is fresh in your mind. Stress test the story yourself by reviewing the 3 key rewards.

Looking for more investment ideas?

If ITT is already on your radar, do not stop here. The bigger opportunity is spotting a few more quality names that fit your style before others do.

• Target value first by checking our list of 46 high quality undervalued stocks that screen for quality businesses trading below their estimated worth.
• Prioritise resilience by scanning 63 resilient stocks with low risk scores that focus on companies with lower risk profiles and more predictable fundamentals.
• Hunt for tomorrow’s standouts through a screener containing 23 high quality undiscovered gems that many investors may not yet be watching closely.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.