Expectations were already high for late-reporting ITT Inc. (ITT), but this multi-industrial nevertheless managed a good top-line beat and an even better performance on margin leverage. Better still, the company broke with a general trend of relatively conservative guidance for the rest of 2021.
I previewed my "but" in the last piece; namely, that Street expectations had already risen pretty notably for this company. The shares have lagged a bit since that last piece, rising around 10% and slightly outperforming the S&P 500, but slightly underperforming the broader industrial sector. Again, I think already-high expectations are part of the issue, as well as a little more investor wariness about auto volume growth in 2021 on component shortages.
Bargains are few and far between in the industrial sector today, and I think ITT can still outperform as important end-markets like aerospace, chemicals, and refining recover in 2022 and beyond. I'd categorize the potential returns here as more "okay" than "compelling", but it is still a relative bargain compared to many industrial names and one that I think has better exposure to later-moving sectors as the recovery matures.
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ITT Inc. Already Seeing Strong Incrementals Ahead Of A Full Revenue Recovery
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