Ingersoll-Rand Modifying Itself

Ingersoll-Rand Company Limited (IR - Snapshot Report) is a diversified manufacturer of industrial equipment and components. Following the sale of the Road Development business last year, Ingersoll-Rand realigned its reporting segments from five to four: Climate Control Technologies, Compact Equipment Technologies, Industrial Technologies and Security Technologies.

Ingersoll Rand reported third quarter EPS of $0.99, below our expectations of $1.09, on weaker-than-expected revenue in Climate Control and on softer margins at Industrial Technologies. International growth is beginning to moderate, as evidenced by third quarter (excluding acquisition) revenue growth of 1% in Asia-Pacific and 2% in Europe & South America.

In response to weaker end-market demand, management is taking several steps to cut costs and balance its manufacturing capacity. This includes closing plants and reducing G&A costs. There are also cost synergies from the Trane integration, which are expected to reach $75 million in 2008, $200 million in 2009, and $300 million by 2010. We rate shares of IR a Hold. Our target price is $16.25.

Read the full analyst report on IR

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