A month has gone by since the last earnings report for Ingersoll Rand (IR Quick QuoteIR - Free Report) . Shares have added about 3.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ingersoll due for a pullback? 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 Q4 Earnings & Revenues Surpass Estimates

Ingersoll Rand reported impressive results for fourth-quarter 2020, with earnings surpassing estimates by 15.2%. Also, sales in the quarters exceeded expectations by 2.5%.

For comparison purpose, the company provided supplemental data, assuming the above-mentioned transaction was completed in January 2018.

Its adjusted earnings in the quarter under review were 53 cents per share, up 43.2% from the supplemental number of 37 cents in the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate of 46 cents.

In 2020, the company’s earnings came in at $1.55 per share, down 1.9% year-over-year.

Revenue Details

Ingersoll Rand’s revenues of $1,510.7 million in the fourth quarter declined 4.9% from the year-ago quarter’s supplemental number. Organic sales in the quarter declined 7.4% year over year, while acquisition had a positive 0.4% impact. Also, movements in foreign currencies had a positive impact of 2.1%.

However, the company’s revenues surpassed the Zacks Consensus Estimate of $1,473 million.

In 2020, the company’s total supplemental revenues were $5.4 billion, down 12.9% year over year.

Orders in the fourth quarter totaled $1,530.1 million, increasing 4.7% from the year-ago quarter’s supplemental number.

The company reports revenues under four market segments. A brief discussion of the quarterly results is provided below:

Industrial Technologies & Services generated revenues of $1,012 million, contributing 67% to net revenues in the reported quarter. Sales fell 5.4% year over year on an 8.1% fall in organic sales. Movements in foreign currencies had a positive impact of 2.4% and acquisitions contributed 0.3%. The segment’s orders in the quarter increased 4.4%.

Precision & Science Technologies’ revenues totaled $206.5 million, contributing 13.7% to net revenues in the fourth quarter. On a year-over-year basis, the segment’s revenues declined 3.1%. Organic sales decline of 7.5% was partially offset by 3.2% gain from movements in foreign currencies and 1.2% gain from acquisitions. The segment’s orders were up 9.8%.

The Specialty Vehicle Technologies generated revenues of $246.1 million, contributing 16.3% to net revenues in the reported quarter. Sales increased 8.7% year over year on 8.3% hike in organic sales and 0.4% benefit from foreign currency movements. The segment’s orders in the quarter increased 21.1%.

High Pressure Solutions’ revenues totaled $46.1 million, contributing 3% to net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues plunged 41.6% on a fall in organic sales of 41.4% and forex woes of 0.2%. The segment’s orders were down 50.9%.

Margin Profile

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter was $344 million, flat year over year. Also, margins increased 110 basis points (bps) to 22.8%.

On a segmental basis, supplemental adjusted EBITDA margin increased 400 bps year over year to 26.1% for Industrial Technologies & Services, and jumped 290 bps to 30.8% for Precision & Science Technologies. Also, margin for Specialty Vehicle Technologies segment grew 420 bps to 18.7% but that of High Pressure Solutions’ were down 14.9 percentage points to 5.4%.

Balance Sheet & Cash Flow

Exiting 2020, Ingersoll Rand had cash and cash equivalents of $1,750.9 million, up 33.3% from $1,313.3 million recorded in the last reported quarter. Long-term debt increased 0.6% sequentially to $3,859.1 million.

The company’s liquidity of $2.7 billion at the end of 2020 comprised cash of $1.8 billion and credit facilities of $1 billion.

In 2020, it generated net cash of $914.3 million from operating activities, up 166.3% year over year. Capital expenditures totaled $48.7 million versus $43.2 million in the previous year.

In the fourth quarter, the company generated free cash flow of $397 million.

Outlook

The company anticipates realizing savings in 2021 as a result of synergy actions related to the combination of Ingersoll-Rand’s Industrial segment with Gardner Denver. These savings are part of $300-million savings expected from the transaction in the first three years of the completion.

The company anticipates realizing revenue growth of high-single to low-double digits in 2021. Also, it expects adjusted EBITDA of $1,230 to $1,260 million, indicating an increase of 14 over the previous year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted -183.33% due to these changes.

VGM Scores

Currently, Ingersoll has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Ingersoll has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.