ITT Intrinsic Value

ITT

ITT Inc – Iron and Steel Forging

itt is a diversified leading manufacturer of highly engineered critical components and customized technology solutions for the energy, transportation and industrial markets. founded in 1920, itt is headquartered in white plains, n.y., with employees in more than 35 countries and sales in a total of approximately 125 countries. the company generated 2012 revenues of $2.5 billion. our product and service offerings are organized in four businesses that generally operate in markets where specialized engineered solutions are required to support customer needs. • industrial process manufactures engineered fluid process equipment serving customers in the oil and gas, mining, power generation, chemical and other process markets. it also is an after market service provider. • motion technologies manufactures brake pads, shock absorbers and damping technologies for global transportation markets. • interconnect solutions manufactures a wide variety of connector products for the oil and

Analysis Results

Intrinsic Value	$136.72
Latest Price	$96.88
Relative Value	29% undervalued

Share results:

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Cash Flow (Billions)

Analysis Parameters

New Ticker

Analysis Details

Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 16.8%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 10.0%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 16.8%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year	Future flow (billion)	Present value (billion)
2023	0.602	0.548
2024	0.704	0.582
2025	0.822	0.618
2026	0.96	0.657
2027	1.12	0.698

Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 14.4 billion. This corresponds to a present value of 8.12 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 3.1 billion. Adding in the terminal value gives a total present value of 11.2 billion.

There are presently 82.1 million outstanding shares, so the intrinsic value per share is 136.72.

Financial Statements

The following data was to determine the past cash flows.

Current Assets	1,836,800,000
Current Cash	561,200,000
Current Liabilities	1,185,500,000
Current Debt	451,000,000
Non-Cash Working Capital (NCWC)	541,100,000
Change in NCWC	197,200,000
EBIT	457,300,000
Tax Provision	91,100,000
Depreciation and Amortization	107,400,000
Capital Expenditure	-103,900,000
Unlevered Free Cash Flow	567,787,721

Current Assets	1,722,100,000
Current Cash	647,500,000
Current Liabilities	928,300,000
Current Debt	197,600,000
Non-Cash Working Capital (NCWC)	343,900,000
Change in NCWC	50,600,000
EBIT	513,900,000
Tax Provision	189,600,000
Depreciation and Amortization	113,100,000
Capital Expenditure	-88,400,000
Unlevered Free Cash Flow	397,812,374

Current Assets	1,917,300,000
Current Cash	859,800,000
Current Liabilities	871,000,000
Current Debt	106,800,000
Non-Cash Working Capital (NCWC)	293,300,000
Change in NCWC	-68,200,000
EBIT	283,800,000
Tax Provision	15,300,000
Depreciation and Amortization	112,200,000
Capital Expenditure	-63,700,000
Unlevered Free Cash Flow	213,135,915

Current Assets	1,736,800,000
Current Cash	612,100,000
Current Liabilities	849,700,000
Current Debt	86,500,000
Non-Cash Working Capital (NCWC)	361,500,000
Change in NCWC	33,500,000
EBIT	412,400,000
Tax Provision	89,900,000
Depreciation and Amortization	113,400,000
Capital Expenditure	-91,400,000
Unlevered Free Cash Flow	378,433,880

Current Assets	1,645,100,000
Current Cash	561,200,000
Current Liabilities	872,100,000
Current Debt	116,200,000
Non-Cash Working Capital (NCWC)	328,000,000
Change in NCWC	-25,100,000
EBIT	356,600,000
Tax Provision	57,700,000
Depreciation and Amortization	109,400,000
Capital Expenditure	-95,500,000
Unlevered Free Cash Flow	292,776,419

Current Assets	1,478,700,000
Current Cash	389,800,000
Current Liabilities	899,400,000
Current Debt	163,600,000
Non-Cash Working Capital (NCWC)	353,100,000
Change in NCWC	63,900,000
EBIT	309,700,000
Tax Provision	194,600,000
Depreciation and Amortization	105,300,000
Capital Expenditure	-113,300,000
Unlevered Free Cash Flow	170,811,312

Current Assets	1,401,800,000
Current Cash	460,700,000
Current Liabilities	866,200,000
Current Debt	214,300,000
Non-Cash Working Capital (NCWC)	289,200,000
Change in NCWC	-20,500,000
EBIT	258,900,000
Tax Provision	76,000,000
Depreciation and Amortization	102,000,000
Capital Expenditure	-111,400,000
Unlevered Free Cash Flow	152,852,941

Current Assets	1,497,700,000
Current Cash	480,600,000
Current Liabilities	953,100,000
Current Debt	245,700,000
Non-Cash Working Capital (NCWC)	309,700,000
Change in NCWC	36,800,000
EBIT	380,100,000
Tax Provision	70,100,000
Depreciation and Amortization	90,000,000
Capital Expenditure	-86,700,000
Unlevered Free Cash Flow	350,503,400

Current Assets	1,636,200,000
Current Cash	589,400,000
Current Liabilities	775,400,000
Current Debt	1,500,000
Non-Cash Working Capital (NCWC)	272,900,000
Change in NCWC	20,400,000
EBIT	266,400,000
Tax Provision	71,300,000
Depreciation and Amortization	88,300,000
Capital Expenditure	-118,800,000
Unlevered Free Cash Flow	183,802,595

Current Assets	1,665,500,000
Current Cash	620,200,000
Current Liabilities	832,600,000
Current Debt	39,800,000
Non-Cash Working Capital (NCWC)	252,500,000
Change in NCWC	100,100,000
EBIT	185,800,000
Tax Provision	-309,600,000
Depreciation and Amortization	86,900,000
Capital Expenditure	-122,900,000
Unlevered Free Cash Flow	249,900,000

Current Assets	1,540,400,000
Current Cash	582,700,000
Current Liabilities	805,300,000
Current Debt	0
Non-Cash Working Capital (NCWC)	152,400,000
Change in NCWC	-87,600,000
EBIT	164,500,000
Tax Provision	39,600,000
Depreciation and Amortization	71,100,000
Capital Expenditure	-83,800,000
Unlevered Free Cash Flow	20,509,859

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