Industrial manufacturer ITT (ITT) has wrapped up FY 2025 with fourth quarter revenue of US$1.1b and basic EPS of US$1.65, rounding out a trailing 12 month run of US$3.9b in revenue and EPS of US$6.15. Over the last two reported fourth quarters, revenue has moved from US$929 million to US$1.1b, while quarterly EPS shifted from US$1.56 to US$1.65. This sets the backdrop for investors watching how the margin story evolves from here.

With the latest numbers on the table, the next step is to see how they line up against the most common market narratives about ITT, and where the data challenges those views.

TTM revenue at US$3.9b with consistent quarterly step up

• Across FY 2025, ITT moved from US$913 million in Q1 revenue to US$1.05b in Q4, and the trailing 12 month line sits at US$3.9b as of Q4. This points to a business putting out roughly US$1b per quarter on a fairly steady run rate.
• What stands out for a bullish take is that this revenue base supports five year annualized EPS growth of 23.8%. However, forecasts point to slower earnings growth of about 11.8% a year. This invites questions about how much of that earlier pace came from one off efficiency gains versus what the current revenue trend can support.

Margins ease from 14.3% to 12.4% on TTM basis

• On trailing numbers, net margin is 12.4% compared with 14.3% in the prior year. TTM net income of US$488.1 million on US$3.9b of revenue lines up with that, so a slightly thinner slice of each sales dollar is turning into profit than before.
• Bears focus on that margin step down and the fact that the latest year showed negative earnings growth versus the strong five year track record. They can point to Q4 net income of US$131.7 million on US$1.05b of revenue as evidence that profitability is solid in absolute terms but not matching the earlier pace, which can make the recent trend look weaker next to the historical EPS growth of 23.8% a year.

P/E at 36.4x with modest gap to DCF fair value

• ITT trades on a trailing P/E of 36.4x at a share price of US$206.87, which sits below a 40.4x peer average but above the 27.9x US Machinery industry. The stock is about 1.1% under a DCF fair value of US$209.08 based on the data provided.
• What helps the bullish side is that the shares are slightly under that DCF fair value while still backed by five year EPS growth of 23.8% a year. Critics will highlight that forward earnings growth of about 11.8% a year and forecast revenue growth of 7.4% a year are both below the market figures cited, which can make the 36.4x P/E look less supported if margins stay around the current 12.4% level.

Want a clearer picture of how this valuation stacks up against different scenarios and time horizons for ITT? 📊 Read the full ITT Consensus Narrative.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on ITT's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

ITT is working from a solid revenue base but the step down in margins, slower forecast earnings growth and relatively high 36.4x P/E leave less room for comfort.

If that mix of thinner margins and a full valuation makes you cautious, check out our 86 resilient stocks with low risk scores to focus on companies with steadier risk profiles and potentially fewer earnings surprises.

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.