Financial Review: ITT (ITT) and Danaher (NYSE:DHR)

ITT (NYSE: ITT) and Danaher (NYSE:DHR) are both multi-sector conglomerates companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, earnings, risk and institutional ownership.

Analyst Ratings

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This is a summary of recent recommendations and price targets for ITT and Danaher, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ITT 0 1 8 0 2.89
Danaher 0 4 14 0 2.78

ITT presently has a consensus target price of $56.29, suggesting a potential upside of 10.82%. Danaher has a consensus target price of $102.40, suggesting a potential upside of 2.89%. Given ITT’s stronger consensus rating and higher probable upside, equities analysts plainly believe ITT is more favorable than Danaher.

Valuation and Earnings

This table compares ITT and Danaher’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ITT $2.59 billion 1.73 $113.50 million $2.59 19.61
Danaher $18.33 billion 3.79 $2.49 billion $4.03 24.69

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

Risk and Volatility

ITT has a beta of 1.55, meaning that its stock price is 55% more volatile than the S&P 500. Comparatively, Danaher has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500.

Institutional & Insider Ownership

94.2% of ITT shares are held by institutional investors. Comparatively, 77.7% of Danaher shares are held by institutional investors. 1.2% of ITT shares are held by company insiders. Comparatively, 11.9% of Danaher shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares ITT and Danaher’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ITT 4.39% 14.65% 6.18%
Danaher 13.60% 11.36% 6.20%

Dividends

ITT pays an annual dividend of $0.54 per share and has a dividend yield of 1.1%. Danaher pays an annual dividend of $0.64 per share and has a dividend yield of 0.6%. ITT pays out 20.8% of its earnings in the form of a dividend. Danaher pays out 15.9% 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 raised its dividend for 5 consecutive years. ITT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Danaher beats ITT on 10 of the 17 factors compared between the two stocks.

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.

Danaher Company Profile

Danaher Corporation designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide. The company's Life Sciences segment provides laser scanning, compound, surgical, and other stereo microscopes. This segment also offers filtration, separation, and purification technologies to the biopharmaceutical, food and beverage, medical, aerospace, microelectronics, and general industrial sectors. Its Diagnostics segment provides chemistry, immunoassay, microbiology, and automation systems, as well as hematology and flow cytometry products. The company offers analytical instruments, reagents, consumables, software, and services for hospitals, physicians' offices, reference laboratories, and other critical care settings. Its Dental segment provides consumables, equipment, and services to diagnose, treat, and prevent disease and ailments of the teeth, gums, and supporting bone. This segment offers implant systems, dental prosthetics, and associated treatment planning software; orthodontic bracket systems and lab products; endodontic systems and related consumables; restorative materials and instruments; infection prevention products; digital imaging systems and software; air and electric powered handpieces, and consumables; and treatment units. Its Environmental & Applied Solutions segment offers instrumentation, services, and disinfection systems to analyze, treat, and manage water in residential, commercial, industrial, and natural resource applications. This segment also provides equipment, software, services, and consumables for packaging, printing, marking, coding, and traceability applications for consumer, pharmaceutical, and industrial products. The company was formerly known as Diversified Mortgage Investors, Inc. and changed its name to Danaher Corporation in 1984. Danaher Corporation was founded in 1969 and is headquartered in Washington, the District of Columbia.

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