ITT Earnings: Exceptional Industrial Process Margins Drive Our 4% Fair Value Estimate Increase

Narrow-moat ITT reported strong 2023 second-quarter results, as order volume and price continue to drive top-line growth. We raise our fair value estimate by 4% to $107 from $103, driven by time value of money and higher operating margins, primarily in the industrial process segment, though accelerated margin expansion in motion technologies also helps. Management raised the midpoint of its adjusted EPS range by 25 basis points. We still model near the top end of guidance with adjusted EPS of $5.10 and full-year organic sales growth north of 7%. We value ITT at 21 times adjusted EPS, relatively in line with the rest of the U.S. multi-industry category.