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ITT Inc. (ITT) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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ITT Inc. (ITT)

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Intrinsic Value (DCF)

Current$183.08
→
Intrinsic$107.32
-41%
$72.10$107.32$174.25
Market implies 25% growth for 5 years
Current price reflects execution expectations above 11% growth — not unreasonable for quality businesses.
At $183, the market prices in continued strong cash flow growth (25%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $72 → Bull $174. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →7%9%11%13%
8%$129$141$154$167
10%$91$99$107$117
12%$69$75$82$89
14%$56$60$65$71

Bull Case

  • Bull case ($174) with 14% growth, 9% discount rate
  • Conservative 11% growth assumption is achievable based on track record

Bear Case

  • Bear case ($72) implies 61% downside at 9% growth, 12% discount
  • Price reflects 25% growth expectations vs 11% historical — high bar to clear
  • Trading 41% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$488.21M
Year 2$543.93M
Year 3$606.01M
Year 4$675.17M
Year 5$752.23M
Terminal$11.07B

📐 Model Inputs

Growth Rate11.4%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$438.20MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is ITT stock undervalued or overvalued?
🔴 OVERVALUED

ITT trades at $183.08 vs. our DCF-derived intrinsic value of $107.32, implying -40% downside. Using a 10.0% WACC and 11.4% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($152.83) suggests limited upside.

What is ITT's intrinsic value?

Using a 5-year DCF model: Base FCF of $438M, projected at 11.4% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $317M net debt and dividing by 0.08B shares: Bear $74.31 | Base $107.32 | Bull $152.83. Current price $183.08 implies -40% to base case.

How is ITT's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 11.4% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($9.15B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 20.9x.