Breaking Down ITT Inc. (ITT) Financial Health: Key Insights for Investors

You're looking at ITT Inc., a company that defintely demands a closer look in this market, because their 2025 financials show a classic high-growth, high-capital-deployment story. The headline numbers look great: analysts project a consensus revenue of roughly $3.91 Billion for the full year, with adjusted earnings per share (EPS) guidance sitting strong between $6.35 and $6.55, reflecting solid demand in their Industrial Process and Connect & Control Technologies segments. But here's the quick math: they've also spent heavily, using debt to fund key acquisitions and deploying $504.9 Million on share buybacks through Q3, which puts their total debt near $1 Billion. Strong demand is covering a lot of sins right now, but you need to understand how that strategic debt load and a rising effective tax rate, which hit 25.7% in the third quarter, will impact the quality of their impressive $450 Million to $500 Million free cash flow forecast.

Revenue Analysis

You need to know where ITT Inc. (ITT)'s growth is actually coming from to make a sound investment decision. The direct takeaway is that while the company is projecting solid top-line expansion, the real story is the strategic shift: acquisitions are fueling non-organic growth, but core pricing and backlog execution are keeping the engine running.

For the full 2025 fiscal year, ITT Inc. is projecting total revenue growth between 6% and 7%, with organic revenue growth-the sales generated from existing operations, not acquisitions-expected to be a more modest 3% to 5%. This growth is built on a strong foundation, as the Trailing Twelve Months (TTM) revenue reported as of September 30, 2025, already hit approximately $3.81 billion, an 8.01% increase year-over-year. [cite: 2, 5, 13 in first search] That's a defintely healthy clip for an industrial conglomerate.

Breakdown of Primary Revenue Sources and Segments

ITT Inc. operates through three core segments, each providing specialized, critical components to industrial, defense, and transportation markets. The primary revenue sources are a mix of products and aftermarket services, which typically command higher margins and provide a recurring revenue stream.

• Motion Technologies (MT): Manufactures highly engineered components like brake pads, shims, and shock absorbers for the global transportation industry, including rail and automotive. [cite: 13 in first search]
• Industrial Process (IP): Provides engineered fluid process equipment-pumps, valves, and plant optimization services-to the chemical, oil and gas, and mining sectors. [cite: 13 in first search]
• Connect & Control Technologies (CCT): Delivers harsh-environment connector solutions and critical energy absorption components for aerospace, defense, and general industrial applications. [cite: 13 in first search]

To see the current weighting, look at the Q3 2025 segment contribution. Industrial Process is now the largest segment, a clear sign that the strategic focus on critical fluid handling and energy markets is paying off. Here's the quick math on the segment mix based on the Q3 2025 revenue of $999.1 million:

Analysis of Significant Revenue Changes and Drivers

The biggest change in the 2025 revenue profile is the impact of strategic mergers and acquisitions (M&A). The Connect & Control Technologies segment, for instance, saw Q3 revenue jump by 25.1% year-over-year, largely driven by the kSARIA acquisition. This acquisition strengthens ITT Inc.'s position in the high-growth aerospace and defense connector markets. Similarly, the Industrial Process segment's strong performance, with a 15% Q3 revenue increase, is benefiting from the Svanehøj acquisition, which focuses on specialized pump projects.

What this estimate hides is the offsetting impact of the Wolverine divestiture from the Motion Technologies segment in the prior year, which slightly depressed MT's reported revenue. Still, the organic growth is driven by pricing actions and productivity gains across all segments, which is a sign of operational discipline. The company's massive backlog, nearly $2 billion entering Q3 2025, also provides a significant buffer and visibility into future revenue streams. You can get a deeper look at the company's long-term strategy by reviewing their Mission Statement, Vision, & Core Values of ITT Inc. (ITT).

Profitability Metrics

When you look at ITT Inc. (ITT), the profitability picture for 2025 is defintely strong, showcasing a business that has successfully managed to push through cost inflation with pricing power and operational efficiency. The direct takeaway is that ITT's margins are healthy and generally outperform the Industrials Sector average, though net income faces pressure from external factors like interest and tax rates.

For the trailing twelve months (TTM) ending September 30, 2025, ITT Inc. reported a Gross Profit of over $1.333 billion on a Revenue of approximately $3.814 billion. Here's the quick math: that translates to a Gross Profit Margin of about 34.95%. This is a critical figure because it shows the company's core manufacturing efficiency-how much is left after the cost of goods sold (COGS). The latest full-year 2025 guidance projects a GAAP Operating Margin between 17.7% and 18.0%, with the Adjusted Operating Margin (which strips out one-time items) expected to be even higher, ranging from 18.2% to 18.5%.

This level of profitability is a clear sign of operational strength, especially when you compare it to the broader Industrials Sector. The average Gross Profit Margin for the sector is around 29.9%. ITT Inc.'s margin is nearly five percentage points higher, putting it ahead of major peers like Caterpillar Inc. at 31.8% and Flowserve Corporation at 32.5%. This premium margin is a testament to the value of their engineered components and custom technology solutions.

• Gross Margin (TTM): 34.95%-well above the 29.9% sector average.
• Adjusted Operating Margin (FY 2025 Guidance): 18.2% to 18.5%-reflects strong cost control.
• Net Margin (Latest): Approximately 14.3%-the final profit retained after all expenses.

Looking at trends, ITT Inc. has been consistently improving its operational efficiency. The TTM Gross Profit ending September 2025 increased by 9.32% year-over-year. The company's focus on productivity savings and strategic pricing actions means that in the third quarter of 2025, their adjusted operating income grew nearly twice the rate of organic sales growth. That is a great indicator of effective cost management-they are getting more profit out of every new dollar of sales.

Still, you need to watch the net profit (the bottom line). While the Gross Margin is up, the Net Margin, which was recently reported at about 13.99%, has faced some headwinds. For example, in the first quarter of 2025, Net Income dropped by 2.8% year-over-year. What this estimate hides is that this was largely due to higher interest expenses-a function of increased debt for strategic acquisitions like kSARIA and Svanehøj-and an increased effective tax rate, not a failure in core operations. The full picture of ITT's financial health is available at Breaking Down ITT Inc. (ITT) Financial Health: Key Insights for Investors.

To summarize the core profitability metrics:

Your action here is to monitor the company's debt reduction plan and the effective tax rate, as those are the primary levers now impacting the final net profit, not the core business performance. The underlying operational efficiency, shown by the expanding adjusted operating margin, remains a strong buy signal.

Debt vs. Equity Structure

You're looking at ITT Inc. (ITT) and wondering if the recent increase in debt is a red flag or a smart capital allocation move. The short answer is that ITT is leaning slightly more on debt to fund growth and shareholder returns, but its overall financial health remains comfortably strong, holding a solid investment-grade credit rating.

As of the third quarter of 2025, ITT Inc.'s total debt stood at approximately $1.07 billion, a notable increase from the prior year, reflecting a strategic shift to finance acquisitions and substantial share repurchases. Specifically, the balance sheet shows a mix of short-term and long-term obligations, which is typical for a global industrial firm.

• Short-Term Debt & Capital Lease Obligation (Sep. 2025): $442 million
• Long-Term Debt & Capital Lease Obligation (Sep. 2025): $641 million

The total debt figure is mitigated by a strong cash position. Here's the quick math: with a cash reserve of $467.9 million as of June 2025, the company's net debt-the debt that really matters-is a much more manageable $603.5 million. That's a healthy buffer. For more context on who is buying ITT shares, you should check out Exploring ITT Inc. (ITT) Investor Profile: Who's Buying and Why?

The Debt-to-Equity (D/E) ratio is the clearest measure of this balance, showing how much debt is used to finance assets relative to shareholder equity. For ITT Inc., the D/E ratio as of October 2025 was around 0.42. This means for every dollar of shareholder equity, the company has 42 cents of debt. This is defintely on the higher end of its historical range, but still quite conservative for the industrial sector.

To be fair, ITT's D/E of 0.42 is higher than some peers like Watts Water Technologies Inc. (around 0.101 or 10.1%) but significantly lower than others, such as Pentair PLC (around 0.448 or 44.8%), confirming a generally moderate leverage profile within its industry. A ratio below 1.0 is often seen as a sign of financial stability, and ITT is well below that threshold.

The company's capital structure strategy is clearly geared toward using debt opportunistically. The debt increase to nearly $1 billion by September 2025 was used to fund growth, including acquisitions and, crucially, a large share repurchase program. This is a deliberate choice to return capital to shareholders while maintaining an investment-grade credit rating.

Speaking of which, the credit markets still view ITT Inc. as very low-risk. As recently as November 20, 2025, Fitch Ratings affirmed ITT's Long-Term Issuer Default Rating (IDR) at 'BBB+' with a Stable Outlook. This rating reflects a conservative capital structure and low leverage, which gives them the financial flexibility to fund discretionary cash deployment like the planned additional $500 million share repurchase.

The company also has strong liquidity, with $516 million in unrestricted cash and access to a $1.1 billion revolving credit facility that matures in 2030, which is a big safety net. This financial flexibility is key. It allows ITT Inc. to manage its short-term liabilities, which include $415 million of commercial paper outstanding as of September 2025.

Finance: Monitor the Net Debt/EBITDA ratio for the full 2025 fiscal year against the 1.2x figure from Q3 to ensure leverage remains conservative.

Liquidity and Solvency

You're looking at ITT Inc. (ITT) and want to know if they have the cash flow to handle their day-to-day operations and fund their growth strategy. The direct takeaway is that ITT's liquidity is solid, anchored by strong cash generation, but you should watch the recent uptick in debt used for acquisitions.

As a seasoned financial analyst, I look at the current ratio and the quick ratio (acid-test ratio) first. These two metrics tell you how well a company can cover its short-term bills. As of the most recent quarter in 2025, ITT's Current Ratio sits at a healthy 1.52. This means for every dollar of current liabilities (bills due in the next year), ITT has $1.52 in current assets to cover it. That's defintely a comfortable position.

The Quick Ratio, which strips out inventory-the least liquid current asset-is at 0.97. While just shy of the ideal 1.0, this is still a strong reading for a manufacturing-heavy company like ITT. It shows that even without selling off their inventory, they can almost cover all their immediate obligations with cash, receivables, and marketable securities. This is a very clear sign of operational efficiency.

Working capital trends also point to strength. Net working capital, which is simply current assets minus current liabilities, peaked in September 2025 at $658.3 million. This increase is a positive sign, reflecting better management of their operating cycle. For example, in Q3 2025, the company saw a boost in operating cash flow due to favorable working capital from faster accounts receivable collections and better vendor payment timing.

• Current Ratio: 1.52-Comfortable short-term coverage.
• Quick Ratio: 0.97-Near-perfect liquidity without relying on inventory.
• Net Working Capital: Peaked at $658.3 million in Q3 2025.

The Cash Flow Statement confirms this operational strength. In Q3 2025 alone, Net cash from operating activities jumped to $174 million, a 40% increase year-over-year. Year-to-date, operating cash flow hit $441 million, up 30%. This is the lifeblood of the company, and it's flowing strong. Plus, management is guiding for full-year 2025 Free Cash Flow (operating cash flow minus capital expenditures) to be around $500 million.

Here's the quick math on their cash movements:

Now, let's look at the financing side. The negative cash from investing (a net outflow of $95.20 million on a trailing twelve-month basis) is mainly due to capital expenditures and strategic acquisitions, which is what you want to see from a growth company. However, they have taken on a substantial increase in debt-specifically short-term Euro commercial paper and a new term loan-to fund these acquisitions and their share repurchase program. What this estimate hides is the change in their capital structure. While the debt-to-equity ratio is still a manageable 0.22, any further aggressive debt-fueled M&A could pressure their interest coverage ratio down the line. For a deeper dive into their long-term strategy, you can read their Mission Statement, Vision, & Core Values of ITT Inc. (ITT).

The key action for you is to monitor their debt-to-EBITDA ratio in the next few quarters. If it stays under 3.0, the liquidity strength from operations should easily absorb the higher interest payments. They're generating cash faster than they're spending it on core operations, which is the best kind of liquidity strength.

Valuation Analysis

You're looking at ITT Inc. (ITT) and asking the right question: Is this stock overvalued, or is the market finally catching up to its intrinsic value? The quick answer is that ITT Inc. is trading at a premium to its sector peers, suggesting the market sees strong growth ahead, but it's not defintely overvalued when you factor in its growth trajectory.

The valuation multiples tell a clear story of a company priced for execution. As of late November 2025, ITT Inc.'s forward Price-to-Earnings (P/E) ratio sits at about 24.49. Here's the quick math: that's higher than the broader Industrials sector average, but investors are willing to pay for the quality of their earnings and their recent performance, like the reported quarterly earnings of $1.78 per share, which beat the consensus estimate of $1.67.

When we look beyond just earnings, the other key metrics confirm this premium valuation:

• Price-to-Book (P/B) Ratio: At approximately 5.24, this is a high multiple, indicating that the stock price is more than five times the company's book value per share.
• Enterprise Value-to-EBITDA (EV/EBITDA): The ratio is around 17.82x, which is also elevated compared to many industrial peers, whose averages often sit closer to the mid-teens. This suggests a high valuation relative to its core operating profitability (earnings before interest, taxes, depreciation, and amortization).

The market is clearly pricing in ITT Inc.'s strong fiscal year 2025 guidance, which they set at $6.620 to $6.680 in earnings per share (EPS).

Stock Performance and Analyst Consensus

The stock price trend over the last 12 months shows significant momentum, which is what drives these higher multiples. The stock has climbed from a 52-week low of $105.64 to a high of $197.07. In 2025 alone, the stock price went up by 26.12%. That's a powerful move, and it reflects the underlying business strength, but still, a rapid rise always introduces volatility risk.

The analyst community is overwhelmingly positive, which helps support the current price. The consensus rating is a 'Moderate Buy' or 'Strong Buy', with an average 12-month price target of about $201.25. This target suggests a modest upside from the current price of around $178.99.

Here is a snapshot of the key valuation and performance figures as of late 2025:

Dividend Profile: A Growth-Oriented Return

If you're looking for a high-yield income play, ITT Inc. is not it. The focus here is growth. The dividend yield is relatively low at around 0.8%, but the dividend is incredibly safe. The payout ratio-the percentage of earnings paid out as dividends-is very low, at approximately 23.26%. A low payout ratio means the company retains most of its earnings to reinvest in the business, supporting future growth and making the current dividend highly sustainable. They have plenty of room to increase the payout in the future, too. You can dive deeper into this at Breaking Down ITT Inc. (ITT) Financial Health: Key Insights for Investors.

The action here is clear: you are buying a company with a premium valuation, but one that is backed by strong analyst confidence and demonstrated earnings power in 2025. Your next step should be to model a sensitivity analysis (a 'what-if' scenario) on the 2026 EPS consensus to see how a slight miss affects the 24.49 P/E multiple.

Risk Factors

You're looking for the unvarnished truth on ITT Inc. (ITT)'s risk profile, and that's smart. The company has a strong financial foundation-Q3 2025 revenue hit a robust $999.1 million, for example-but even the best-run industrial conglomerates face real headwinds. Your biggest near-term concerns fall into three buckets: macroeconomic volatility, operational execution, and the financial drag of strategic growth.

The core external risk is simply global economic fluctuation. ITT Inc. operates globally, with a significant portion of its revenue outside the U.S., which exposes it to foreign currency exchange rate swings. Plus, the stock's Beta, a measure of its volatility relative to the market, is higher at about 1.6, meaning its price movements can be more dramatic than the S&P 500.

• Geopolitical Tension: Disrupts supply chains and international sales.
• Commodity Volatility: Raw material price swings impact the cost structure.
• Tariff Exposure: The company identified a 2025 tariff exposure of $25 million.

The good news is the company is defintely a trend-aware realist on these issues. To counter the $25 million tariff risk, management has stated they are using strategic pricing and sourcing adjustments, which they expect will result in '0 impact when it comes to income' for the year. They also use derivative financial instruments, like forward contracts, to mitigate foreign currency risk. That's a clear, concrete action that changes the risk calculation.

Operational and Strategic Risks: The Execution Challenge

On the internal side, the biggest risks are tied directly to execution in two areas: supply chain and Mergers & Acquisitions (M&A). ITT Inc. is a manufacturer of highly engineered components, so any quality issue or supply chain disruption can lead to product recalls and financial losses. They must continuously invest in quality control; there's no cutting corners here.

Strategically, ITT Inc. is focused on growth through M&A, aiming to spend $500 million to $700 million per year on acquisitions. While this is a clear growth driver, it introduces integration risk. You see this in the 2025 numbers: analysts flagged margin dilution from fast-growing acquisitions as a headwind, which can temporarily pressure the adjusted operating margin, projected to be between 18.2% and 18.5% for the full year. The biggest risk remains exposure to project delays and unpredictable market shifts, especially in their project-based revenue segments.

Here's the quick math on the financial risk: The company's full-year adjusted EPS outlook was raised to a midpoint of $6.65, which is an impressive 13% to 14% annual growth. But achieving that hinges on successful execution of their high-margin project backlogs and realizing productivity savings to offset cost inflation. If project execution slips, that EPS target is at risk.

You can read more about the company's long-term vision in their Mission Statement, Vision, & Core Values of ITT Inc. (ITT).

To be fair, ITT Inc. is not just sitting on its hands; they are countering these risks by focusing on operational efficiency and productivity enhancements, which drove a 14% increase in adjusted operating income in Q3 2025. The company also maintains a strong liquidity position, projecting a healthy Free Cash Flow of $500 million for the full year 2025. Still, the trade-off is clear: aggressive M&A for growth means you must watch the integration costs closely.

Growth Opportunities

You're looking for where ITT Inc. (ITT) goes from here, and the short answer is: they are defintely executing on a clear, acquisition-fueled growth plan that targets high-margin industrial niches. They just raised their full-year 2025 guidance, projecting adjusted earnings per share (EPS) to land between $6.62 and $6.68, a solid 13% to 14% jump over the prior year.

That momentum isn't accidental; it's driven by a disciplined strategy of execution, innovation, and smart mergers and acquisitions (M&A). Here's the quick math: the company expects total revenue growth of 6% to 7% for 2025, with organic growth-the revenue from existing businesses-contributing 3% to 5%. The rest comes from strategic portfolio moves.

The company's competitive advantage rests on its long-standing brand reputation for reliable, highly engineered critical components, plus its diversification across three core segments: Motion Technologies, Industrial Process, and Connect & Control Technologies.

Key Growth Drivers and Innovations

The biggest near-term drivers are a combination of successful acquisitions and market expansion into high-demand sectors. The Industrial Process (IP) segment, for example, is seeing robust demand for large pump projects, especially in the energy sector and the Middle East. To capitalize on this, ITT Inc. is doubling its capacity in Saudi Arabia with a roughly $25 million investment announced in November 2025. That's a clear, concrete action that maps directly to regional growth.

• Acquisitions: Svanehøj and kSARIA are outperforming, driving significant order growth. In November 2025, Svanehøj acquired KOHO, adding compressor technology for the growing gas solutions market.
• Product Innovation: The new VIDAR motor line, an industrial motor with an embedded variable frequency drive, is aimed at improving efficiency in harsh environments.
• Market Penetration: The Connect & Control Technologies (CCT) segment is seeing strong tailwinds from aerospace and defense demand.

Future Projections and Strategic Actions

ITT Inc.'s full-year outlook is strong, supported by a nearly $2 billion backlog entering Q3 2025, which gives them excellent revenue visibility into the coming quarters. They are also generating significant cash, with free cash flow projected to be around $500 million for the full year 2025. This cash generation is what fuels their M&A strategy, which is central to their long-term plan.

Here's what the core 2025 guidance looks like, based on the latest Q3 results:

What this estimate hides is the company's focus on margin expansion. They expect to see continued margin improvement through productivity programs, automation, and pricing actions, particularly in the CCT and Motion Technologies segments. They are also committed to deploying between $500 million and $700 million annually on accretive acquisitions through 2030, a clear signal that portfolio transformation remains a high priority. If you want a deeper dive into the institutional money behind this, you can check out Exploring ITT Inc. (ITT) Investor Profile: Who's Buying and Why?

The next step is simple: Track the conversion of that $2 billion backlog into revenue, especially in the Industrial Process segment, as this will confirm their operational execution.