Industrial goods manufacturer Ingersoll-Rand Plc (IR - Free Report) reported strong first-quarter 2017 results with adjusted earnings per share (EPS) of 57 cents share compared with 50 cents in the year-earlier quarter. Adjusted earnings beat the Zacks Consensus Estimate of 53 cents.
The GAAP earnings of the company were 47 cents per share compared with 48 cents in the year-ago period. The year-over-year decrease in GAAP earnings despite higher revenues was primarily attributable to higher operating expenses.
Quarterly revenues were $3,000.6 million, up from $2,894.1 million recorded in the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $2,917 million. Meanwhile, organic revenues improved 4% year over year. Organic revenues from North America and International markets increased 6% and 2%, respectively.
Segmental Performance
The climate segment recorded sales of $2,324.1 million compared with $2,213.5 million in the year-ago quarter. The upside was driven by solid revenues from commercial and residential HVAC (heating, ventilation and air conditioning) businesses.
The industrial segment posted revenues of $676.5 million in the reported quarter, down from $680.6 million in the prior-year quarter owing to decline in the material handling business.
Margins
Operating margin for the first quarter was 7.2% compared with 7.8% in the year-ago quarter. Adjusted operating margin improved to 8.3% from 8.1% in the prior-year quarter. Adjusted operating margin for the Climate segment was 10.6% compared with 9.9% in the year-ago quarter. Adjusted operating margin for the Industrial segment was 10.4%, up from 9.8% in the year-ago quarter.
Balance Sheet and Cash Flow
As of Mar 31, 2016, cash and cash equivalents totaled $1,322.5 million while long-term debt was $3,711.1 million. Net cash used in operating activities in the first quarter was $43.4 million compared with $7.6 million in the prior-year period. Working capital was 5.8% of revenues for 2017 compared with 6.2% in 2016, representing 40 basis points improvement.
Outlook
Ingersoll reaffirmed its guidance for 2017. It expects adjusted EPS from continuing operations to be in the range of $4.35 to $4.50 while revenues are expected to rise 2%. Cash flow from operating activities is expected to be $1.4–$1.5 billion while free cash flow is projected within $1.1–$1.2 billion.
Ingersoll currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other stocks worth considering in the industry include 3M Company (MMM - Free Report) , Crane Co. (CR - Free Report) and Bunzl plc (BZLFY - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3M has a long-term earnings growth expectation of 9.7% and is currently trading at a forward P/E of 22.5x.
Crane Co. has a long-term earnings growth expectation of 10.10%.
Bunzl has a long-term earnings growth expectation of 7.5% and is currently trading at a forward P/E of 21.3x.
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Industrial goods manufacturer Ingersoll-Rand Plc (IR - Free Report) reported strong first-quarter 2017 results with adjusted earnings per share (EPS) of 57 cents share compared with 50 cents in the year-earlier quarter. Adjusted earnings beat the Zacks Consensus Estimate of 53 cents.
The GAAP earnings of the company were 47 cents per share compared with 48 cents in the year-ago period. The year-over-year decrease in GAAP earnings despite higher revenues was primarily attributable to higher operating expenses.
Quarterly revenues were $3,000.6 million, up from $2,894.1 million recorded in the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $2,917 million. Meanwhile, organic revenues improved 4% year over year. Organic revenues from North America and International markets increased 6% and 2%, respectively.
Segmental Performance
The climate segment recorded sales of $2,324.1 million compared with $2,213.5 million in the year-ago quarter. The upside was driven by solid revenues from commercial and residential HVAC (heating, ventilation and air conditioning) businesses.
The industrial segment posted revenues of $676.5 million in the reported quarter, down from $680.6 million in the prior-year quarter owing to decline in the material handling business.
Margins
Operating margin for the first quarter was 7.2% compared with 7.8% in the year-ago quarter. Adjusted operating margin improved to 8.3% from 8.1% in the prior-year quarter. Adjusted operating margin for the Climate segment was 10.6% compared with 9.9% in the year-ago quarter. Adjusted operating margin for the Industrial segment was 10.4%, up from 9.8% in the year-ago quarter.
Balance Sheet and Cash Flow
As of Mar 31, 2016, cash and cash equivalents totaled $1,322.5 million while long-term debt was $3,711.1 million. Net cash used in operating activities in the first quarter was $43.4 million compared with $7.6 million in the prior-year period. Working capital was 5.8% of revenues for 2017 compared with 6.2% in 2016, representing 40 basis points improvement.
Outlook
Ingersoll reaffirmed its guidance for 2017. It expects adjusted EPS from continuing operations to be in the range of $4.35 to $4.50 while revenues are expected to rise 2%. Cash flow from operating activities is expected to be $1.4–$1.5 billion while free cash flow is projected within $1.1–$1.2 billion.
Ingersoll currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other stocks worth considering in the industry include 3M Company (MMM - Free Report) , Crane Co. (CR - Free Report) and Bunzl plc (BZLFY - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3M has a long-term earnings growth expectation of 9.7% and is currently trading at a forward P/E of 22.5x.
Crane Co. has a long-term earnings growth expectation of 10.10%.
Bunzl has a long-term earnings growth expectation of 7.5% and is currently trading at a forward P/E of 21.3x.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
Click here for a peek at this private information >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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