We have issued an updated research report on ITT Corp.ITT on Aug 27, 2015. The company came up with modest earnings in the last quarter, with earnings exceeding but revenues missing the estimates.
ITT is suffering due to uncertainty in the global macro-economic environment, especially weakness in the industrial markets. Huge decline in oil and gas as well as chemical markets poses a concern for the company. Based on unfavorable oil price movements, the company anticipates decline in revenues from oil and gas segments in 2015. In addition, a reduction in oil and gas prices is hampering the pumps and connectors business with increasing level of project delays and order cancellations by customers.
Also, as the company has a strong presence in international markets, its business is exposed to exchange-rate fluctuations and foreign currency translation risks. Continuous strengthening of the U.S. dollar has affected the company's top-line growth. Moreover, the company's Interconnect Solutions ('ICS') business has been facing operational challenges due to shift of several production lines within its North American footprint. ITT expects such operational disruptions to continue in the second half too and weigh on the company's profitability in the near term. Projecting the abovementioned uncertainties to persist in future, ITT has slashed its earnings guidance again for 2015.
Echoing similar sentiments, analysts have trimmed their expectations. Over, the last 30 days, the Zacks Consensus Estimate for 2015 and 2016 lowered by 1.2% and 1.4% respectively to $2.52 and $2.75 respectively.
Nevertheless, ITT's continuing organic investments is expected to drive profitability going forward. In the reported quarter, the company concluded the acquisition of leading aerospace environmental control systems manufacturer, Hartzell Aerospace. Also, the company aims to continue with its organic investments in motion technologies business to maximize the production levels, which is encouarging.
Stocks to Consider
ITT currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include AO Smith Corp. AOS , Dycom Industries Inc. DY and China Railway Construction Corporation Limited CWYCY . All stocks carry a Zacks Rank #1 (Strong Buy).
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