Engineered components manufacturer for critical industries ITT Inc. (NYSE: ITT) beat Wall Street’s revenue expectations in Q1 CY2025, but sales were flat year on year at $913 million. Its non-GAAP profit of $1.45 per share was 0.8% above analysts’ consensus estimates.
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ITT (ITT) Q1 CY2025 Highlights:
- Revenue: $913 million vs analyst estimates of $907.8 million (flat year on year, 0.6% beat)
- Adjusted EPS: $1.45 vs analyst estimates of $1.44 (0.8% beat)
- Adjusted EBITDA: $88.1 million vs analyst estimates of $193.4 million (9.6% margin, 54.4% miss)
- Management reiterated its full-year Adjusted EPS guidance of $6.30 at the midpoint
- Operating Margin: 5.6%, down from 16.4% in the same quarter last year
- Free Cash Flow Margin: 8.4%, up from 3.3% in the same quarter last year
- Organic Revenue was flat year on year (9.5% in the same quarter last year)
- Market Capitalization: $11.17 billion
Company Overview
Playing a crucial role in the development of the first transatlantic television transmission in 1956, ITT (NYSE:ITT) provides motion and fluid handling equipment for various industries
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, ITT’s sales grew at a tepid 5.2% compounded annual growth rate over the last five years. This wasn’t a great result compared to the rest of the industrials sector, but there are still things to like about ITT.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. ITT’s annualized revenue growth of 9% over the last two years is above its five-year trend, suggesting some bright spots. 
We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, ITT’s organic revenue averaged 6.1% year-on-year growth. Because this number is lower than its normal revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results. 
This quarter, ITT’s $913 million of revenue was flat year on year but beat Wall Street’s estimates by 0.6%.
Looking ahead, sell-side analysts expect revenue to grow 4.5% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
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Operating Margin
ITT has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 15.2%.
Analyzing the trend in its profitability, ITT’s operating margin rose by 6.9 percentage points over the last five years, as its sales growth gave it operating leverage.
In Q1, ITT generated an operating profit margin of 5.6%, down 10.8 percentage points year on year. Conversely, its gross margin actually rose, so we can assume its recent inefficiencies were driven by increased operating expenses like marketing, R&D, and administrative overhead.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
ITT’s EPS grew at a decent 9.8% compounded annual growth rate over the last five years, higher than its 5.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Diving into the nuances of ITT’s earnings can give us a better understanding of its performance. As we mentioned earlier, ITT’s operating margin declined this quarter but expanded by 6.9 percentage points over the last five years. Its share count also shrank by 7.4%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth. 
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For ITT, its two-year annual EPS growth of 12.7% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.
In Q1, ITT reported EPS at $1.45, up from $1.42 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects ITT’s full-year EPS of $5.89 to grow 10.8%.
Key Takeaways from ITT’s Q1 Results
It was good to see ITT narrowly top analysts’ organic revenue, revenue, and EPS expectations this quarter. That ITT reiterated full-year EPS guidance means the company remains on track despite the choppy macro. Overall, this was a decent quarter. The stock remained flat at $138.02 immediately after reporting.
So should you invest in ITT right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.