Markets ebb and flow, but here recently it looks like valuation may actually matter a bit again, and that’s not good for a generally expensive industrial sector. While I continue to like ITT (ITT) as a long-term holding, and the shares did modestly outperform the larger industrial sector since my last update, a negative rerating for the wider sector won’t leave this stock untouched.
ITT is showing impressive margin leverage, and although the market has recently been obsessed with growth and theme over quality, margins are a powerful long-term driven of multiples and valuation. Moreover, I do think ITT has some thematic positives, including leverage to EVs and longer-term cyclical recoveries in the aerospace, oil/gas, and chemical end markets. The shares still have worthwhile long-term potential, and they’re more reasonably-priced than many industrials, but I can’t really pound the table at today’s price.
Read the full article at Seeking Alpha:
ITT Inc. Delivers Impressive Margin Leverage, But The Market Wants More
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