ITT INC. (ITT): what the price assumes

In the published model solve dated 2026-Q2, anchored at $202.99, ITT INC. (ITT) is priced for today's economics sustained for ~6.2 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/ITT

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: elevated (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.8%); the inversion above states its own rate.

Per-Model Detail (n=7)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• ITT is a diversified industrial spanning friction and motion components for autos and rail, pumps and valves for process industries, and aerospace and defense connectors, with the friction business built on brake pads installed "as original equipment (OE) on passenger cars."
• At $196.86 only the forward-growth method reaches the price; the asset, earnings-power, and peer-multiple methods all say richly valued, so the price is a bet on durable compounding the static frames cannot capture.
• The company just closed the SPX FLOW acquisition a month early, lifting leverage to about 2.7 times and creating a new Flow Technologies segment, and first-quarter adjusted EPS of $1.98 beat the roughly $1.72 consensus.

Bull Case

The case for ITT starts with the quality of its competitive positions, because that is what the price is really paying for. The company does not sell commodity parts; it sells highly engineered components that get designed into customers' platforms and stay there for the life of the program. The 10-K describes the source of advantage directly as "the highly customized application engineering embedded within our products, our proprietary rights, our knowledge capabilities and our brand recognition," which is the language of switching costs and specification lock-in. In friction, ITT supplies brake pads as original equipment on passenger cars through brands like ITT Friction Technologies, KONI, and Axtone, where being designed onto a vehicle platform means years of follow-on aftermarket and replacement revenue.

The return profile backs the moat claim. ITT runs an adjusted operating margin guided to the high teens to roughly 20% for 2026, with management targeting 30 to 120 basis points of expansion, and it earns returns on capital well above its cost of capital, which is precisely why the static valuation frames look stretched: methods that capitalize today's earnings with no growth cannot price a business that has compounded margins and share gains for years. First-quarter revenue rose 33%, with 11% organic growth driven by aerospace and defense in the connectors business, share gains in motion technologies, and momentum in pumps and valves. That breadth across auto, rail, process, and defense end markets smooths the cycle that would whipsaw a single-end-market industrial.

The SPX FLOW acquisition is the growth engine the price is underwriting. Closed a month ahead of schedule, it created a combined Flow Technologies segment positioned as a global leader in critical flow solutions, is expected to deliver low-teens adjusted EPS accretion in 2026, and is on track to capture a third of $80 million in cost synergies in the first year. Management initiated full-year adjusted EPS guidance of $7.70 to $8.00, up 9% at the midpoint, with total revenue up 36% to 38% including the deal. The forward-growth method that reaches the current price is, in effect, crediting ITT for being a serial compounder that integrates acquisitions and expands margins, which is exactly the track record the moat language in the filing is meant to defend.

Bear Case

The structural vulnerability in ITT today sits on the right side of the balance sheet. To buy SPX FLOW, the company took leverage to about 2.7 times, and it now carries roughly $4.3 billion of gross debt against only about $600 million of liquid assets, leaving net debt near $3.7 billion. That is a different ITT from the lightly-levered compounder of recent years. Net debt now runs above five times trailing operating income, and while interest coverage near ten times looks comfortable today, the cushion was built before the new debt and the integration costs fully season. A levered balance sheet narrows the room to absorb a downturn in the cyclical auto, rail, and process end markets that supply most of the revenue, and it makes the company dependent on the deal delivering its promised cash flows on schedule.

The integration itself is the fragility multiplier. The 10-K flags that uncertainty about the effect of an acquisition on "customers, suppliers, employees and other constituencies may have a material adverse effect," and a deal this size, closed quickly, carries real execution risk: synergy targets can slip, customer overlap can leak revenue, and management attention gets pulled toward integration just as several end markets face their own pressures. ITT also depends on a supply chain it does not fully control, noting risks from suppliers' ability to provide "sufficient quality or flow of materials" and from price increases and re-qualification delays, all of which hit harder when leverage leaves less margin for error.

Then there is the valuation, which is where the balance-sheet risk and the price meet. The static methods are unanimous that the stock is rich: the earnings-power value is a small fraction of the price, the asset and excess-return methods land in the mid-fifties, and even the peer-multiple methods sit well below $197. Only the forward-growth method reaches the price, and it does so by assuming durable high-single-digit compounding plus full delivery of the acquisition's accretion and synergies. The framework reads this as elevated, with the durability premium tripping its rarity flag. The danger is the combination: a price that already prices in successful compounding, layered on top of a balance sheet that just took on meaningful debt to fund the very growth the price assumes. If integration disappoints or the cyclical end markets soften while leverage is elevated, the stock has a long way to fall back toward where the static methods say it belongs.

Valuation

ITT is the textbook elevated case in this framework: at $196.86, only the forward-growth method reaches the price, while the asset, earnings-power, and peer-multiple families all say richly valued. The earnings-power value, capitalizing normalized operating profit with no growth, is a small fraction of the price; the excess-return and residual-income methods cluster in the mid-fifties; relative valuation lands near $129 and EV/EBITDA near $76. The discounted-future-market-cap method, which projects revenue forward and applies a terminal multiple, is the lone family that reaches roughly $201, essentially today's price. The blended figure across the static methods is around $58, which is the framework's way of saying the price embeds a large premium for durability the present numbers cannot justify.

The inversion makes that premium concrete. Rather than implying a specific one-year growth rate, the price implies an unusually long runway of above-average operating margins, with an implied margin near 12% sustained over a roughly seven-year duration. In plain terms, the market is paying for ITT to keep compounding at high returns for years, integrating acquisitions and expanding margins the way it has. That is a coherent bet given the track record and the moat language in the filing, but it is a bet, and the rarity check flags the price as elevated, with the durability assumption tripping a flag rather than sitting comfortably in range.

The balance sheet is now part of the valuation story, not just the risk section. The SPX FLOW deal lifted leverage to about 2.7 times, with net debt near $3.7 billion against about $600 million of liquid assets and net debt above five times operating income. Interest coverage near ten times is still adequate, but the financial structure that funds the growth the price assumes is itself more fragile than before. The published analyst response to the quarter was positive and the stock rose on the print, but the price already reflects the optimistic path.

Catalysts

The defining event was the SPX FLOW acquisition, which closed on March 2, a month ahead of schedule, and reshaped ITT into a larger, more flow-focused industrial. The company folded its Industrial Process unit together with SPX FLOW to form a new Flow Technologies segment positioned as a global leader in critical flow solutions, took leverage to about 2.7 times, and guided the deal to low-teens adjusted EPS accretion in 2026 with a third of $80 million in cost synergies expected in the first year.

The first-quarter print beat and the stock rose. ITT reported revenue of $1.2 billion, up 33% (11% organic) on aerospace and defense strength, motion-technologies share gains, and pumps-and-valves momentum, with adjusted EPS of $1.98 ahead of the roughly $1.72 consensus. Management initiated full-year adjusted EPS guidance of $7.70 to $8.00, up about 9% at the midpoint, with organic revenue growth of 4% to 6% and adjusted operating margin of 19.7% to 20.6%. The catalysts that matter from here are the integration milestones, specifically whether the synergy capture and accretion track to plan, the trajectory of organic orders in the cyclical auto, rail, and process markets, and the pace of deleveraging back toward the company's historical range. Those integration and deleveraging proof points are what determine whether the durability premium in the price is earned.

Peer Cohorts (Per Segment, With Filing Citations)

Motion Technologies (reported)

• GNTX (GENTEX CORPORATION)
• FY2025 10-K: …for the passenger compartment on the Boeing 787 Dreamliner Series of Aircraft and certain other aircraft. For dimmable aircraft windows, transfer of control and revenue recognition occurs when the Company ships the product from the manufacturing facility to the customer. Fire Protection Technologies The Company…
• FY2025 10-K: …permit the Company to maintain its competitive position. Nanofiber Products and Development The Company completed the acquisition of Vaporsens, Inc. ("Vaporsens") in 2020. Vaporsens specializes in nanofiber chemical sensing research and development. Markets and Marketing. While no current commercialized product yet…
• APTV (APTIV PLC)
• FY2025 10-K: …was reclassified to investments in affiliates in the consolidated balance sheets and is included in the Advanced Safety and User Experience segment. Motional Joint Venture Funding and Ownership Restructuring Transactions -On April 19, 2024, Aptiv and Hyundai Motor Group ("Hyundai") entered into an agreement to…
• FY2025 10-K: …we continue to believe we are well-aligned with long-term key industry technology trends and continue to make investments to further develop and grow our product offerings in this space. We are also continuing to develop market-leading automated driving solutions, such as automated driving software, sensing and…
• DORM (Dorman Products, Inc.)
• FY2025 10-K: …Vehicle, effective May 2025. Ms. Pacheco previously held senior management positions with Tenneco Inc., a provider of products for motor vehicle original equipment and aftermarket customers from 2014 to 2024, most recently as Vice President, General Manager, Noise Vibration Harshness, Performance Materials. Prior to…
• FY2025 10-K: …Inc., and Danaher Corporation. Prior thereto, Mr. Olsen performed public accounting work at PricewaterhouseCoopers LLP. Mr. Olsen is also a director of Twin Disc, Inc., a publicly traded international manufacturer and worldwide distributor of heavy-duty off-highway and marine power transmission equipment and related…
• GTX (Garrett Motion Inc.)
• FY2025 10-K: …in innovative technologies that address the needs of our customers in the ongoing auto industry transformation. This continued investment in differentiated technology, coupled with our relentless focus on customer relationships and our global capabilities, allows us to drive the following business strategies: •…
• FY2025 10-K: …of Garrett Motion Inc., dated May 29, 2024 10-Q 001-38636 3.1 7/25/2024 97 3.2 Fifth Amended and Restated By-Laws of Garrett Motion Inc., dated May 29, 2024 10-Q 001-38636 3.2 7/25/2024 4.1 Description of Capital Stock 10-K 001-38636 4.1 2/20/2025 4.2 Indenture, dated as of May 21, 2024, among Garrett Motion Holdings…
• BWA (BORGWARNER INC)
• FY2025 10-K: …of related automotive components and systems. • Turbos & Thermal Technologies. This segment's products include turbochargers, eBoosters, eTurbos, emissions systems, thermal systems, gasoline ignition technology, smart remote actuators, powertrain sensors, cabin heaters, battery heaters and battery cooling systems. •…
• FY2025 10-K: …trends that are driving the Company's long-term growth that management expects to continue, including adoption of product offerings for electrified vehicles and increasingly stringent global emissions standards that support demand for the Company's products that drive vehicle efficiency. 39 Table of Contents RESULTS…
• MOD (MODINE MANUFACTURING CO)
• FY2025 10-K: …Technologies segment designs and manufactures products and solutions using air-cooled and liquid-cooled technology for vehicular, stationary power, and industrial applications. Air-cooled products consist primarily of powertrain cooling products, such as radiators, condensers, engine cooling modules, charge air…
• FY2025 10-K: …right to payment for customized products and solutions, the Climate Solutions segment recognizes revenue over time based upon its estimated progress toward satisfaction of the performance obligations. Performance Technologies The Performance Technologies segment provides products and solutions that enhance the…
• VC (VISTEON CORPORATION)
• FY2025 10-K: …optics, haptic feedback, and light effects. The Company offers a new generation of large, curved, complex multi-display modules with optical performance designed to be competitive with mobile devices. The Company also developed the first bendable glass multi-display cockpit in the automotive industry and is the…
• FY2025 10-K: …the Company's core business: Electronics. The Electronics segment provides products and services to customers, including digital instrument clusters, information displays, infotainment, cockpit domain controllers, CognitoAI TM , battery management systems, high voltage power electronics, and engineering services. As…
• LEA (LEAR CORP)
• FY2025 10-K: …competitive advantage facilitating our leadership position in the industry. We are committed to reducing the environmental footprint of our products, operations and supply chain as a means to drive business growth and reduce costs. We are working to improve the sustainability of our operations through identification…
• FY2025 10-K: …to facilitate these functions. Key components of this portfolio include zonal controllers, body domain control modules, and smart and passive power distribution modules. Our software offerings include embedded control, cybersecurity software and software to control hardware devices. Our customers traditionally have…

Industrial Process (reported)

• FLS (FLOWSERVE CORP)
• FY2025 10-K: …Company's products and services are based on technological advances. In addition, the Company will need to compete for talent that is familiar with such technologies, including upskilling its workforce. There can be no assurance that the Company will continue to compete effectively with its industry peers as new…
• FY2025 10-K: …this Annual Report. Business Functions Our business segments share a focus on industrial flow control technology and have a number of common customers. These segments also have complementary product offerings and technologies that are often combined in applications that provide us a net competitive advantage. Our…
• XYL (Xylem Inc.)
• FY2025 10-K: …a combination of direct channels, indirect channels and service capabilities. Both utility and industrial facility customers increasingly require our teams' global but locally proficient expertise to use our equipment in their specific applications. Several trends are increasing demand for this application expertise:…
• FY2025 10-K: …included within "Other intangible assets, net" on our Consolidated Balance Sheets. As of December 31, 2025 and 2024, we had net capitalized software used in sales and services to external customers of $175 million and $185 million, respectively. Intellectual Property We generally seek patent protection for inventions…
• DOV (DOVER Corp)
• FY2025 10-K: …service solutions used in textile, apparel, soft signage and specialty materials markets. Businesses within this segment leverage digital printing capabilities and operate business models that involve initial equipment and software sales followed by consumable, software, and service aftermarket revenue streams. Our…
• FY2025 10-K: …Our businesses that develop product identification, printing equipment and software solutions believe their customers expect a continuing rate of product innovation, performance improvement and reduction in total cost of ownership. The result has been downward pricing trends that can only be mitigated with the…
• PH (PARKER-HANNIFIN CORPORATION)
• FY2025 10-K: …including sales and pricing, resulting from global reactions to U.S. trade policies; • manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and economic conditions such as inflation, deflation, interest rates and credit availability; inability to obtain, or meet…
• FY2025 10-K: We offer hundreds of thousands of individual part numbers, and no single product contributed more than one percent to our total net sales for the year ended June 30, 2025. Listed below are some of our principal products. Diversified Industrial Segment . Our Diversified Industrial Segment products consist of a broad…
• IEX (IDEX CORP)
• FY2025 10-K: …Company is exposed to fluctuations in commodity pricing and inflation, including the impact of tariffs, and attempts to control these impacts through increased prices to customers and various other programs with its suppliers. Suppliers The Company manufactures many of the parts and components used in its products.…
• FY2025 10-K: …results, they may also have the effect of heightening many of the other risks described in this Item 1A , "Risk Factors" of this annual report, such as those relating to international operations, the Company's ability to develop new products, the Company's ability to execute on its growth strategy of acquisitions,…
• GGG (GRACO INC.)
• FY2025 10-K: Industrial Segment The Industrial segment represented approximately 45 percent of our total sales in 2025. It includes the Industrial and Powder divisions. The Industrial segment markets equipment and solutions for moving and applying paints, powder coatings, sealants, adhesives and other fluids. Markets served…
• FY2025 10-K: …then supply to their customers. Industrial The Industrial division designs and manufactures liquid finishing and advanced fluid dispensing equipment; pumps to move chemicals, petroleum, food, and other fluids; and systems, components, and accessories for the automatic lubrication of bearings, gears, and generators.…
• CIR (CIR)
• (no filing in the citation store)

Connect & Control Technologies (reported)

• TEL (TE CONNECTIVITY PLC)
• FY2025 10-K: …internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may…
• FY2025 10-K: …• We evaluated whether the estimates of future taxable income were consistent with evidence obtained in other areas of the audit. • We evaluated whether the taxable income in prior carryback years was of the appropriate character and available under the tax law. • With the assistance of our income tax and other…
• APH (AMPHENOL CORP /DE/)
• FY2025 10-K: …with customers across its diverse end markets. The Company works closely with its customers at the design stage to create and manufacture innovative solutions. These products generally have higher value-added content than other interconnect, antenna and sensor products, and have been developed across the Company's…
• FY2025 10-K: …customer relationships on a global basis so that it can bring to bear its total resources to meet the worldwide needs of its multinational customers. ​ Manufacturing ​ The Company is a global manufacturer employing advanced manufacturing processes including molding, stamping, plating, turning, computer numerical…
• BELFA (BEL FUSE INC /NJ)
• FY2025 10-K: …A roll forward of the redeemable noncontrolling interest for the years ended December 31, 2025 and December 31, 2024 is included in the accompanying consolidated statements of shareholders' equity and redeemable noncontrolling interest. 53 Table of Contents 4. REVENUE Nature of Goods and Services Our revenues are…
• FY2025 10-K: …pulling the product from the hub. Payment due related to our licensing agreements is generally within 30 days of receiving the licensee sales data, which is either on a quarterly or annual basis. Since the customer agrees to a stated price for each product on each purchase order, the majority of contracts are not…
• HEI (HEICO CORPORATION)
• FY2025 10-K: …misappropriation or obsolescence from occurring by developing new techniques and improving existing methods and processes, which we will continue on an ongoing basis as dictated by the technological needs of our business. We believe that, based on our competitive pricing, reputation for high quality, short lead time…
• FY2025 10-K: …acquired 87.9 % of the stock of Mid Continent Controls, Inc. ("MC2"). The remaining 12.1 % interest continues to be owned by certain members of MC2's management team. See Note 13, Redeemable Noncontrolling Interests, for additional information. MC2 designs and manufactures proprietary in-cabin power and entertainment…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.