ITT INC. (ITT) stock intrinsic value fair value estimate & owner earnings analysis

ITT is a diversified industrial (Motion Technologies: brake pads/friction/shock absorbers for auto & rail; Industrial Process: pumps; Connect & Control Technologies: connectors for aerospace/defense/industrial) that historically carried a legacy asbestos tort liability from pre-2011 operations. That overhang is largely BEHIND the company, not ahead of it: ITT paid a one-time $398.0M cash payment in 2021 to fully divest InTelCo, the entity holding legacy asbestos assets/liabilities, and divested a further residual entity (Wolverine) in 2024; only generic indemnification risk-factor language remains, no quantified reserve on the current balance sheet, and no going-concern language from the auditor. Screen: not Chinese/VIE, not cannabis, not crypto, not a shell (Entity Shell Company=false), no going-concern doubt -- all clear. Owner Earnings (CFO-Capex-SBC)/diluted share, from 10-K/XBRL: 2016 $1.30, 2017 $1.30, 2018 $2.87, 2019 $2.83, 2020 $4.11 (COVID working-capital tailwind), 2021 -$1.31 (distorted by the $398M asbestos-entity divestiture payment, not representative), 2022 $1.86 (post-COVID supply-chain/working-capital rebuild trough), 2023 $4.96, 2024 $5.02, 2025 $6.40. Excluding the 2021 anomaly, the trend shows real, buyback-assisted compounding of per-share owner earnings as margins expanded and the portfolio mix shifted toward higher-margin friction and aerospace/defense connectors. The critical new fact for this valuation: on Dec 4, 2025 ITT agreed to acquire SPX FLOW (pumps/valves/mixers/flow-process solutions) for ~$4,775M ($4,075M cash + ~3.84M ITT shares, plus a separate equity raise), closing ~March 2026 and folding into Industrial Process. This roughly quadruples total debt (from ~$786M at FY2025-end toward an estimated $3.5-4.5B pro forma) and lifts diluted shares from ~80M toward ~89M, while SPX FLOW's own owner-earnings contribution is not observable in ITT's own historical XBRL and is therefore NOT modeled explicitly -- a deliberate conservative simplification (we capture the new debt burden but not the acquired earnings power). DCF (two-stage, 10-yr explicit + terminal, per diluted share, net of pro-forma net debt/share): BEAR ($5.00 starting OE reflecting integration drag/auto-cycle & industrial recession risk, 2% growth, 11% discount, 2% terminal, -$40/share net debt with no paydown) = ~$17. BASE ($5.75 starting OE, 7% growth -- a moderated version of the demonstrated trend, 9.25% discount, 2.5% terminal, -$35/share net debt) = ~$87. BULL ($6.25 starting OE, 8% growth reflecting continued margin expansion plus SPX FLOW synergies realized but still well below management's own guidance, 8.25% discount, 3% terminal, -$30/share net debt assuming faster deleveraging) = ~$152. The margin-of-safety price is set at a steeper ~36% discount to base ($56) rather than the standard ~30%, because near-term uncertainty is elevated by a transformative, largely debt-funded acquisition roughly on the same order of magnitude as ITT's own pre-deal enterprise value, layered on top of ordinary auto-production and industrial-capex cyclicality. Caveats: (1) DCF is anchored to ITT-standalone historical cash flows: SPX FLOW's incremental earnings power is unverified from bbase data and excluded, so BASE/BULL likely understate normalized forward owner earnings while BEAR appropriately stresses the added leverage; (2) post-close interest expense on the new debt will pressure near-term CFO in a way not fully isolated in the growth path; (3) current_price intentionally left blank per instructions.