A global multi-industry leader in high-technology engineering
and manufacturing, ITT Corporation (
) is set to report its first quarter fiscal 2013 results on May
2. In the last reported quarter, it posted a 2.6% positive
surprise. Let's see how things are shaping up for this
Why a Likely Positive Surprise?
Our proven model shows that ITTis likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
Expected Surprise Prediction or
Zacks Earnings ESP
, which represents the difference between the Most Accurate
Estimate and the Zacks Consensus Estimate, for IIT is currently
pegged at 4.65%. This is a leading indicator of a likely positive
earnings surprise for shares.
Zacks #3 Rank (Hold):
ITT currently has a Zacks Rank #3 (Hold).Stocks with a Zacks Rank
#1, a Zacks Rank #2 and a Zacks Rank #3 have a significantly
higher chance of beating earnings. The sell-rated stocks (Zacks
Rank #4 and Zacks Rank #5) should ideally be avoided going into
an earnings announcement.
The combination of a Zacks Rank # 3 (Hold) and 4.65% ESP makes
us bullish on ITT for the impending quarter.
What is Driving the Better-than-Expected Earnings?
ITT focuses on highly engineered solutions and has maintained
an above average peer level of investment in research &
development programs at approximately 3% of sales. However, the
emerging markets have also been a major source of revenue driver
for the company. This region represents approximately 30% of the
total consolidated revenue for the company and in the last
quarter (4Q12), ITT reported significant growth in automotive in
China, chemical in the Middle East and mining in Latin America,
among others. The aftermarket solutions are also very profitable
for ITT. The company has been working on the expansion of its
aftermarket service and in fiscal 2012, it contributed about 30%
to the top line.
In addition, ITT has also made some strategic acquisitions in
fiscal 2012, including the purchase of Bornemann Pumps, which
will provide a global leadership position in advanced oil and gas
pumping technologies. The company also acquired Blakers that
enbaled ITT to expand its aftermarket footprint in Australia. A
combination of all these makes us bullish about ITT's earnings,
and we expect the company to beat its estimates.
Other Stocks to Consider
Here are some other companies operating in the same sector
that have the right combination of elements to post an earnings
beat this quarter:
DXP Enterprises Inc.(
Earnings ESP of +8.05% and a Zacks Rank #1(Strong Buy).
), Earnings ESP of +14.39% and a Zacks Rank #2 (Buy).
United Technologies Corp. (
,Earnings ESP of +0.63% and a Zacks Rank #3 (Hold)
DXP ENTERPRISES (DXPE): Free Stock Analysis
ITT CORP (ITT): Free Stock Analysis Report
UTD TECHS CORP (UTX): Free Stock Analysis
WORTHINGTON IND (WOR): Free Stock Analysis
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