ITT Corp. ITT recently disclosed an investment of about $20 million in its Motion Technologies business to enhance braking technology production capabilities in the Jiangsu Province of China. However, shares of the company dipped marginally (0.2%), since the announcement of this news on Mar 24, due to broader market concerns.
Coming to the news, the investment is in sync with ITT’s ongoing efforts of making this facility fully equipped to serve the Chinese automotive market. In the last three years, the company made total investments of around $50 million. Moreover, ITT’s latest move is aimed at providing its global original equipment and brake manufacturers with highly advanced products to cater to escalating customer needs.
The company’s Motion Technologies business specializes in manufacturing highly engineered and durable components, consisting of brake pads, shock absorbers and damping technologies for the transportation industry worldwide. The segment, which is the major revenue generator for ITT, has largely expanded its client base in key markets like China, Western Europe and North America in last two years.
With improvement in the Chinese automotive market, ITT Corp.’s decision seems prudent. As per Bloomberg, China’s auto sales upped 10% in January this year aided by a rise in demand for sport utility vehicles and minivans. Also, the firm expects a 7% escalation in auto sales in China this year.
Since the last few quarters, ITT Corp. has been focusing on making organic investments in the optimization of its Motion Technologies business to enhance efficiency and effectiveness. The company has also been aiming at improving its auto brake pad manufacturing and aftermarket-reaching capabilities in the Industrial Process business. Hence, such targeted investments allow the company to lay a strong foundation for organic growth in the long run.
ITT currently has a Zacks Rank #3 (Hold). Some better-ranked players in this space are Compass Diversified Holdings CODI, Willdan Group, Inc. WLDN and Dycom Industries Inc. DY. While Dycom and Willdan sport a Zacks Rank #1 (Strong Buy), Compass Diversified carries a Zacks Rank #2 (Buy).
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