ITT INC.

Where It Passes

Where It Falls Short

• Valuation models0% pass✗ 11▾

  ITT overvalued: all 11 models price fair value below $211.18 (median $80.80)

  Graham fair value$80.80

  ✗Graham-161.4% margin vs $211.18

  Buffett fair value$70.07

  ✗Buffett-201.4% margin vs $211.18

  Lynch fair value$152.75

  ✗Lynch-38.3% margin vs $211.18

  Greenblatt fair value$57.97

  ✗Greenblatt-264.3% margin vs $211.18

  Dreman fair value$87.05

  ✗Dreman-142.6% margin vs $211.18

  Munger fair value$115.12

  ✗Munger-83.4% margin vs $211.18

  Pabrai fair value$45.51

  ✗Pabrai-364.0% margin vs $211.18

  Akre fair value$208.67

  ✗Akre-1.2% margin vs $211.18

  Marks fair value$55.59

  ✗Marks-279.9% margin vs $211.18

  Ackman fair value$155.99

  ✗Ackman-35.4% margin vs $211.18

  Templeton fair value$76.35

  ✗Templeton-176.6% margin vs $211.18
• Valuation8% pass✓ 3✗ 25▾

  12 of 13 flag ITT's valuation — Graham, Greenblatt, Dreman +9 more

  Price / 3-yr avg EPS36.5x

  ✗Graham<= 15x

  Price-to-Book Ratio4.4x

  ✗Graham<= 1.5x

  P/E x P/B162.20

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)0.70

  ✓Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value3.3%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=3.3%, ROC=46.4%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS34.6x

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)27.2x

  ✗Dreman< 8x

  Price / Book Value per Share4.4x

  ✗Dreman< 1.2x✗Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Valuation ReasonablenessP/E=34.6x, OE Yield=2.8%

  ✗MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF YieldP/E=34.6x, FCF Yield=2.9%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=34.6x, P/B=4.4x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-143.2% (IV=$86.85 vs Price=$211.18)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share33.2x

  ✗Ackman<= 25

  Price vs. Trailing Low164% of trailing low ($129.16)

  ✗Templeton<= 120% of trailing low (certified split-adjusted live window)

  Net income / market capitalization+2.22%; #2653/6340 (top 41.8%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive book equity / market capitalization+0.2528; #3907/6449 (top 60.6%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS34.6x

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E1.44

  ✓Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per Share8.48x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change+93.2%

  ✓SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+0.2750; #3442/5247 (top 65.6%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+3.43%; #1945/4519 (top 43.0%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-2.64%; #2983/6202 (top 48.1%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Profitability13% pass✓ 13✗ 22▾

  14 of 16 flag ITT's profitability — Graham, Buffett, Lynch +11 more

  Positive EPS (10 years)21/24 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)23/24 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)15.5%

  ✓Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)17.4% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$509.9M

  ✗BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)0.70

  ✓Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR49.1%

  ✓Lynch15-30% (Fast Grower); > 0% to pass

  ROE8.8%

  ✗Lynch> 15%

  EBIT / Enterprise Value3.3%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=3.3%, ROC=46.4%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets7.73%

  ✓PiotroskiROA > 0

  ROA Change YoY10.99% -> 7.73% (delta: -3.26%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=10.60%, ROA=7.73%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY34.4% -> 35.4%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue12.0%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity8.8%

  ✗Dreman> 12%

  Margin of SafetyP/E=34.6x, P/B=4.4x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity15.7% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-143.2% (IV=$86.85 vs Price=$211.18)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency23/24 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue14.0%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity8.8%

  ✗Ackman>= 15%

  5-Year EPS CAGR49.1% CAGR over 5 years

  ✓Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend16.2% (2023) -> 17.4% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 33.8% -> 35.4%, operating margin 16.2% -> 17.4%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  Net income / market capitalization+2.22%; #2653/6340 (top 41.8%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Gross profit / total assets+17.17%; #2262/3702 (top 61.1%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+8.78%; #1987/5226 (top 38.0%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0116; #927/5884 (top 15.8%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR49.1% over 5 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years10/10 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Verdicts23% pass✓ 3✗ 10▾

  Split decision: 9 FAIL · 4 NEUTRAL · 3 PASS

  Overall verdict

  ✗GrahamFAIL (2/9)✓BuffettPASS (4/9)✗LynchFAIL (3/7)✗GreenblattRank #1112✓PiotroskiPASS (F-Score 5)✗DremanFAIL (3/11)✗MungerFAIL (1/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (3/5)✓AckmanPASS (5/9)•TempletonNEUTRAL (5/8)•SleepNEUTRAL (4/6)✗AsnessFAIL (Rank #1307/2370 (Top 55.1%))•NeffNEUTRAL (4/6)•SchlossNEUTRAL (4/7)✗OshaughnessyFAIL (Rank #905/963 (Top 94.0%))
• Debt & Leverage25% pass✓ 5✗ 10▾

  9 of 12 flag ITT's debt & leverage — Graham, Buffett, Lynch +6 more

  LT Debt vs Net Current AssetsLT Debt $2.8B vs NCA $624.5M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.74, IC: 3.6x

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / Equity0.74

  ✗Lynch< 0.33

  Cash - Long-term Debt$-2.2B

  ✗LynchPositive preferred

  LT Debt / Total Assets Change4.92% -> 8.26%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities1.29

  ✗Dreman> 1.5✗SchlossCurrent ratio >= 1.50x (app cutoff)

  Total Debt / Shareholders' Equity0.74

  ✓Dreman< 0.8✓Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✓SchlossD/E < 1.00x

  Debt Levels0.74

  ✗MungerDebt/Equity < 0.5✗AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDAIC=3.6x, D/EBITDA=3.5x

  ✓MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity0.74

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.7379; #2905/4210 (top 69.0%)

  ✗AsnessTop 30% of eligible cross-section
• Growth38% pass✓ 7✗ 6▾

  5 of 8 flag ITT's growth — Graham, Lynch, Dreman +2 more

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)0.70

  ✓Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR49.1%

  ✓Lynch15-30% (Fast Grower); > 0% to pass

  Inventory Growth vs Revenue GrowthInv: 42.6% vs Rev: 35.8%

  ✗LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency23/24 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth9.9%

  ✓Ackman>= 5%

  Positive EPS Growth Frequency4/5 years with positive EPS growth

  ✓AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR49.1% CAGR over 5 years

  ✓Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 33.8% -> 35.4%, operating margin 16.2% -> 17.4%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR9.7%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR49.1% over 5 years

  ✗Neff7%-20% annualized
• Efficiency38% pass✓ 5✗ 6▾

  5 of 8 flag ITT's efficiency — Graham, Piotroski, Dreman +2 more

  Current Ratio1.29

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)18.7%

  ✓Buffett> 10%

  ROIC - WACC+8.7%

  ✓BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)46.4%

  ✓Greenblatt> 25%

  Current Ratio Change YoY1.41 -> 2.58

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.77x -> 0.62x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities1.29

  ✗Dreman> 1.5

  Return on Invested Capital6.9%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=15.4%; FY2024: ROIC=15.6%; FY2025: ROIC=11.1%

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROIC4.8% (RR=69% x ROIC=6.9%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)4/5 years above 12% (latest 11.1%)

  ✓SleepROIC > 12% in a majority of years
• Cash Flow50% pass✓ 6✗ 6▾

  5 of 10 pass — Buffett, Dreman, Pabrai +2 more object

  Free Cash Flow Proxy$509.9M

  ✗BuffettPositive and growing

  FCF Positive and Growing$646.8M

  ✓LynchPositive and growing

  Operating Cash Flow$668.8M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=10.60%, ROA=7.73%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)27.2x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=34.6x, FCF Yield=2.9%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive14/18 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap3.6%

  ✗Ackman>= 4%

  Price / FCF per Share33.2x

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency15/18 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$646.8M

  ✓Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization+3.43%; #1945/4519 (top 43.0%)

  ✗OshaughnessyTop 10% of eligible cross-section