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Ingersoll-Rand (IR) Down 3.1% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Ingersoll-Rand (IR - Free Report) . Shares have lost about 3.1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ingersoll-Rand due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Ingersoll-Rand Q1 Earnings & Revenues Beat Estimates

Ingersoll-Rand reported better-than-expected results for first-quarter 2019.

Quarterly adjusted earnings came in at 89 cents per share, up 27.1% year over year. The bottom line also outpaced the Zacks Consensus Estimate of 79 cents.

Revenues came in at $3,576 million, up 6% year over year. The top line also exceeded the consensus estimate of $3,503 million. Revenues grew 8% organically. 

Bookings in the quarter were $3,744 million, down 4% year over year.

Segmental Breakup

Revenues in the Climate segment came in at $2,803.7 million, up 7.4% year over year. The top line of the Industrial segment declined 0.3% to $772.2 million.

Costs/Margins

Cost of goods sold in the reported quarter totaled $2,517.3 million, up 4% year over year. Selling and administrative expenses were $740.1 million, up 2.6%.

Quarterly adjusted operating margin expanded 90 basis points to 9.4%. This upside stemmed from stellar revenues, pricing actions and improved productivity.

Balance Sheet & Cash Flow

Exiting the first quarter, Ingersoll-Rand had cash and cash equivalents of $1,907.4 million compared with $903.4 million in the last reported quarter. Long-term debt increased to $5,226.5 million from $3,740.7 million recorded as of Dec 31, 2018.

In the first quarter, the company used net cash of $52.6 million from operating activities compared with $66.2 million used in the prior-year quarter. Capital expenditure totaled $60.8 million versus $52.8 million.

During the reported quarter, the company distributed $127.7 million as dividends and repurchased shares worth $250 million.

Outlook

Ingersoll-Rand is poised to grow on the back of continued growth in bookings and revenues as well as its unique capital allocation strategy. The company has revised its earnings view for 2019 from $6.15-$6.35 per share to roughly $6.35.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Ingersoll-Rand has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Ingersoll-Rand has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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