Critical Review: Sumitomo (OTCMKTS:SSUMY) versus ITT (NYSE:ITT)

Sumitomo (OTCMKTS:SSUMY) and ITT (NYSE:ITT) are both large-cap multi-sector conglomerates companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, analyst recommendations, valuation, earnings and risk.

Valuation and Earnings

This table compares Sumitomo and ITT”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sumitomo	$47.89 billion	0.91	$3.75 billion	$3.08	11.77
ITT	$3.94 billion	4.13	$488.00 million	$6.11	30.97

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sumitomo	7.56%	11.27%	4.60%
ITT	12.39%	17.74%	10.12%

Institutional & Insider Ownership

91.6% of ITT shares are owned by institutional investors. 0.5% of ITT shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Sumitomo pays an annual dividend of $0.67 per share and has a dividend yield of 1.8%. ITT pays an annual dividend of $1.54 per share and has a dividend yield of 0.8%. Sumitomo pays out 21.8% of its earnings in the form of a dividend. ITT pays out 25.2% 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 10 consecutive years. Sumitomo is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Sumitomo has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500. Comparatively, ITT has a beta of 1.34, meaning that its share price is 34% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Sumitomo and ITT, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sumitomo	0	1	0	1	3.00
ITT	0	1	9	0	2.90

ITT has a consensus target price of $216.50, suggesting a potential upside of 14.41%. Given ITT’s higher probable upside, analysts plainly believe ITT is more favorable than Sumitomo.

Summary

ITT beats Sumitomo on 12 of the 18 factors compared between the two stocks.

About Sumitomo

Sumitomo Corporation engages in general trading business worldwide. It operates through six segments: Metal Products; Transportation & Construction Systems; Infrastructure; Media & Digital; Living Related & Real Estate; and Mineral Resources, Energy, Chemical & Electronics. The company provides steel sheets and tubular products; and manufactures, leases, sells, services, and finances ships, aircrafts, motor vehicles, construction equipment, and components and parts. It is involved in the development of renewable energy projects comprising power generation and power plant engineering, procurement, and construction activities; electricity retail; industrial facilities and equipment, water, transportation systems and infrastructure, airports, smart city project, environmental solutions, and storage battery businesses; development and operation of industrial parks; arranging insurance; and provision of logistics services. In addition, the company engages in the cable television, 5G related technologies, programming distribution, movies, digital media and video content, TV shopping, and e-commerce businesses; cell phone, ICT platform, digital solution, and venture capital businesses; provision of smart communications infrastructure; operation of food supermarkets and drugstore chains; trade of cement and building materials; and real estate businesses. Further, it develops and trades in coal, iron ore, manganese, uranium, non-ferrous and precious metals, petroleum, natural gas and liquefied natural gas, and commodity derivative transactions; trades in non-ferrous metal products, liquefied petroleum gas, storage batteries, carbon products, plastics, organic and inorganic chemicals, silicon wafers, LEDs, pharmaceuticals, agricultural chemicals, household insecticides, fertilizers, and veterinary drugs; engages in the investing activities; and provides electronics manufacturing services. Sumitomo Corporation was incorporated in 1919 and is headquartered in Tokyo, Japan.

About ITT

ITT Inc., together with its subsidiaries, manufactures and sells engineered critical components and customized technology solutions for the transportation, industrial, and energy markets in the United States and internationally. The Motion Technologies segment manufactures brake pads, shims, shock absorbers, and energy absorption components; and sealing technologies primarily for the transportation industry, including passenger cars, trucks, light- and heavy-duty commercial and military vehicles, buses, and trains. This segment sells its products under ITT Friction Technologies, KONI, Wolverine Advanced Materials, Axtone, Novitek, and GALT. brand names. The Industrial Process segment provides industrial pumps, valves, and plant optimization and remote monitoring systems and services; and aftermarket solutions, such as replacement parts and services. It serves various customers in industries, such as chemical, energy, mining, and other industrial process markets. This segment sells its products under Goulds Pumps, Bornemann, Engineered Valves, PRO Services, C'treat, i-ALERT, Rheinhütte Pumpen, and Habonim brand names. The Connect & Control Technologies segment designs and manufactures a range of engineered connectors and specialized products for critical applications supporting various markets, including aerospace and defense, industrial, transportation, medical, and energy. This segment provides connector products, such as circular, rectangular, radio frequency, fiber optic, D-sub miniature, micro-miniature, and cable assemblies; and control products consist of highly engineered actuation, flow control, energy absorption, environmental control, and composite component solutions for the aerospace, defense, and industrial markets under Cannon, VEAM, BIW Connector Systems, Aerospace Controls, Enidine, Compact Automation, Neo-Dyn Process Controls, Conoflow, and Micro-Mode brand names. The company was incorporated in 1920 and is headquartered in Stamford, Connecticut.