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Ingersoll (IR) Gains From Buyouts & Products Amid Risks

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We have issued an updated research report on Ingersoll Rand Inc. (IR - Free Report) on Mar 24.

The company is based in Davidson, NC, and currently has a $20.4-billion market capitalization. It has expertise in industrial and mission-critical flow creation technologies. The company presently carries a Zacks Rank #3 (Hold).

Ingersoll belongs to the Zacks Manufacturing - General Industrial industry, which comes under the Zacks Industrial Products sector.

In the past three months, the company’s shares have gained 2.5% compared with the industry’s growth of 87.2%. During the same timeframe, the sector has expanded 28.8% and the S&P 500 has grown 5.7%.




 

Important factors influencing Ingersoll are briefly discussed below.

Tailwinds and Projections: Ingersoll’s earnings and sales performance in the fourth quarter of 2020 was better than expected. Earnings exceeded estimates by 15.2%, while sales beat the same by 2.5%.

In the quarters ahead, Ingersoll seems well-poised to gain from its solid product offerings, innovation capabilities and talented workforce. Also, its exposure in multiple end markets, including chemical, industrial manufacturing, transportation, upstream energy and others, enables it to offset weakness in some markets with strengths in the others. Investments in the e-commerce, digital and IoT space as well as its cost-saving actions might also be beneficial.

Ingersoll anticipates high-single to low-double-digit year-over-year revenue growth for 2021. For segments, organic sales are expected to grow in mid-single digits for Specialty Vehicle Technologies, Precision & Science Technologies, and Industrial Technologies & Services.

The company’s earnings estimates have been increased, reflecting positive sentiments for the stock. In the past 60 days, the Zacks Consensus Estimate for Ingersoll’s earnings has been raised by 2.9% for the first quarter of 2021, 2.8% for 2021 and 0.5% for 2022.

Buyouts: Ingersoll has gained from expanded product offerings, market share and growth opportunities as a result of acquisitions over time. Notably, buyouts boosted the company’s fourth-quarter sales by 0.4%.

In September 2020, Ingersoll added France-based manufacturer of electric peristaltic pumps, Albin Pump SAS, to its portfolio. The buyout added strength to the company’s business related to fluid management. Also, Ingersoll acquired Tuthill Vacuum and Blower Systems in February 2021, and thus, solidified its vacuum and blower product offerings. Notably, Ingersoll anticipates generating revenues of $60 million from the Tuthill Vacuum and Blower buyout in 2021.

Stake Disposal: In order to restrict its exposure in the oil & gas market, Ingersoll has planned to divest a major stake in the High Pressure Solutions segment. Though this will be done in the best interest of the company, its impacts on the financial performance in the near term cannot be ignored.

Headwinds Related to International Business: With considerable presence outside the United States, Ingersoll’s business is exposed to foreign currency translation, geopolitical issues, and others. Notably, unfavorable movements in foreign currencies negatively impacted the High Pressure Solutions segment’s orders by 0.3% and revenues by 0.2% in the fourth quarter of 2020.

Stocks to Consider

Some better-ranked stocks in the industry are EnPro Industries, Inc. (NPO - Free Report) , Dover Corporation (DOV - Free Report) and Graco Inc. (GGG - Free Report) . While EnPro currently sports a Zacks Rank #1 (Strong Buy), both Dover and Graco carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these stocks have improved for the current year. Further, earnings surprise for the last reported quarter was 143.14% for EnPro Industries, 13.14% for Dover and 19.61% for Graco.

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