ITRN

We rate Ituran Location & Control Ltd. (ITRN) as a Buy with a composite score of 73.7/100 at a current price of $47.96. The stock scores above average across the majority of our six quantitative factors and ranks #23 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in value (97th percentile) and quality (95th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (63/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Ituran Location & Control Ltd. holds a top-quartile position (#1 of 50) within the Wholesale Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 73.7/100 places it at rank #23 in our full 7,333-stock universe. At $612M in market capitalization, Ituran Location & Control Ltd. is a small-cap player in the Wholesale Trade space, which limits certain scale advantages but may allow for more agile strategic execution.

The outlook is moderately positive, with revenue expanding at 5% and favorable momentum (62th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 48% (+25.3pp vs sector) narrow to operating margins of 21% (+17.9pp vs sector) and net margins of 16.8%, yielding a gross-to-net conversion rate of 35%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $47.96, Ituran Location & Control Ltd. appears undervalued relative to its fundamentals. Our value factor score of 97/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 17.6x (roughly in line with the sector median of 19.1x), EV/EBITDA of 2.4x (discounted to peers), P/B of 5.2x, P/S of 0.7x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to Ituran Location & Control Ltd.. The company exhibits strong financial stability with a beta of 0.90, conservative leverage (0% D/E), and a stability factor in the 67th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 67th percentile with quality at the 95th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 48% provide a buffer against cost pressures; conservative leverage (0% D/E) limits balance sheet risk; above-average stability (67th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Ituran Location & Control Ltd.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 122.1%, disciplined leverage (0% D/E), a 5.08% dividend yield. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Ituran Location & Control Ltd. meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 5.08% dividend yield, and the combination of 69.2% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Ituran Location & Control Ltd. receives a Buy rating with a composite score of 73.7/100 (rank #23 of 7,333). Our quantitative framework assigns a Narrow Moat (63/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 74/100.

Our analysis supports a constructive view on Ituran Location & Control Ltd.. The combination of identifiable competitive advantages, low uncertainty, and exemplary capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.