ITT (NYSE: ITT) and Eaton Corporation, PLC (NYSE:ETN) are both mid-cap multi-sector conglomerates companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitabiliy, analyst recommendations, institutional ownership, dividends, risk, earnings and valuation.

Analyst Ratings

This is a summary of recent recommendations and price targets for ITT and Eaton Corporation, PLC, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ITT 0 1 7 0 2.88
Eaton Corporation, PLC 1 11 7 0 2.32

ITT presently has a consensus target price of $46.67, suggesting a potential upside of 10.69%. Eaton Corporation, PLC has a consensus target price of $77.83, suggesting a potential downside of 1.89%. Given ITT’s stronger consensus rating and higher possible upside, research analysts clearly believe ITT is more favorable than Eaton Corporation, PLC.

Risk & Volatility

ITT has a beta of 1.47, suggesting that its share price is 47% more volatile than the S&P 500. Comparatively, Eaton Corporation, PLC has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500.

Valuation & Earnings

This table compares ITT and Eaton Corporation, PLC’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ITT $2.42 billion 1.55 $369.00 million $2.17 19.43
Eaton Corporation, PLC $19.78 billion 1.79 $3.21 billion $4.30 18.45

Eaton Corporation, PLC has higher revenue and earnings than ITT. Eaton Corporation, PLC is trading at a lower price-to-earnings ratio than ITT, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

92.6% of ITT shares are owned by institutional investors. Comparatively, 76.4% of Eaton Corporation, PLC shares are owned by institutional investors. 1.2% of ITT shares are owned by insiders. Comparatively, 0.8% of Eaton Corporation, PLC shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

ITT pays an annual dividend of $0.51 per share and has a dividend yield of 1.2%. Eaton Corporation, PLC pays an annual dividend of $2.40 per share and has a dividend yield of 3.0%. ITT pays out 23.5% of its earnings in the form of a dividend. Eaton Corporation, PLC pays out 55.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. ITT has increased its dividend for 4 consecutive years and Eaton Corporation, PLC has increased its dividend for 7 consecutive years. Eaton Corporation, PLC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares ITT and Eaton Corporation, PLC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ITT 8.04% 14.65% 5.76%
Eaton Corporation, PLC 9.86% 12.82% 6.33%

ITT Company Profile

ITT Corporation (ITT) is a diversified manufacturer of engineered critical components and technology solutions for industrial markets. The Company’s product and service offerings are organized in four segments: Industrial Process, Motion Technologies, Interconnect Solutions and Control Technologies. Industrial Process manufactures engineered fluid process equipment, and is a provider of plant optimization, solutions and aftermarket services and parts. Motion Technologies manufactures brake components, shock absorbers and damping technologies for the automotive, truck and trailer, public bus and rail transportation markets. Interconnect Solutions manufactures and designs a range of engineered connector solutions that makes it possible to transfer signal and power between electronic devices. Control Technologies manufactures equipment, including actuation, valves, and noise and energy absorption components for the aerospace and defense, and industrial markets.

Eaton Corporation, PLC Company Profile

Eaton Corporation (Eaton) is a diversified power management company. It is engaged in the manufacturing of electrical components and systems for power quality, distribution and control; hydraulics components, systems and services for industrial and mobile equipment; aerospace fuel, hydraulics and pneumatic systems for commercial and military use, and truck and automotive drivetrain and powertrain systems for performance, fuel economy and safety. On January 1, 2011, it closed the acquisition of the Tuthill Coupling Group, which is a division of the Tuthill Corporation. It has five segments: Electrical Americas and Electrical Rest of World; Hydraulics; Aerospace; Truck, and Automotive. On October 1, 2010, it acquired CopperLogic, Inc. On July 15, 2010, it acquired EMC Engineers, Inc. In May 2011, it acquired Internormen Technology Group. In August 2011, it acquired IE Power, Inc. In December 2011, it acquired E.A. Pedersen Company.

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