Investment Thesis
ITT Inc. exhibits fundamental deterioration with unacceptably low returns on equity (1.6%) and assets (0.7%), indicating severe capital inefficiency. Despite 8.5% revenue growth, net income and EPS are declining, revealing margin compression and operational headwinds. The combination of high leverage ($3.4B debt), declining profitability, and poor capital returns signals deteriorating business quality.
Strengths
- Revenue growth of 8.5% YoY demonstrates market demand in pumps and equipment sector
- Reasonable interest coverage ratio (5.7x) indicates adequate near-term debt serviceability
- Solid cash position of $600.8M with acceptable current ratio (1.53x) provides liquidity buffer
Risks
- Critically low ROE (1.6%) and ROA (0.7%) reveal severe capital deployment inefficiency and asset underutilization
- Profitability declining (-0.7% net income, -3.3% EPS) despite revenue growth signals structural margin compression and operational deterioration
- High debt burden ($3.4B long-term debt) combined with declining profitability raises sustainability and covenant concerns
Key Metrics to Watch
- Operating margin trend (monitor if compression continues or stabilizes)
- Return on equity and return on assets (must improve materially to justify capital structure)
- Net income growth versus revenue growth (currently diverging negatively)
Financial Metrics
Revenue
1.2B
Net Income
78.0M
EPS (Diluted)
$0.89
Free Cash Flow
N/A
Total Assets
11.1B
Cash
600.8M
Profitability Ratios
Gross Margin
35.4%
Operating Margin
11.7%
Net Margin
6.4%
ROE
1.6%
ROA
0.7%
FCF Margin
N/A
Balance Sheet & Liquidity
Current Ratio
1.53x
Quick Ratio
1.01x
Debt/Equity
0.71x
Debt/Assets
57.4%
Interest Coverage
5.72x
Long-term Debt
3.4B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T10:47:37.322907 |
Data as of: 2026-04-04 |
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