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Reasons to Hold Trane Technologies (TT) Stock in Your Portfolio

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Trane Technologies plc (TT - Free Report) has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of quality and sustainability of its growth. The company’s earnings for 2021 and 2022 are expected to improve 36.6% and 14.2% respectively, year over year.

The stock has gained a massive 63.5% in the past year against 27.4% decline of the industry it belongs to.

What’s Supporting the Rally?

Trane continues to focus on increasing its revenue stream from parts, services, controls, used equipment and rentals. The company is also focused on improving the quality of its products and services, along with its operating efficiencies, so as to achieve sustained improvement in earnings and cash flow.

Trane prioritizes improving its business operating system and innovation through transformation initiatives and investments. With a view to lower its cost structure, the company targets $100 million in annualized cost savings for 2021 and $300 million annualized savings by 2023.

Trane puts consistent efforts to reward its shareholders. During 2020, the company repurchased shares worth $250 million and paid out dividends totaling $507.3 million. It repurchased shares for $750.1 million and $900.2 million, and paid out dividends totaling $15.8 and $41.4 million in 2019 and 2018, respectively. Such moves indicate Trane’s commitment toward boosting shareholders’ value and underlining its confidence in its business.

Some Risks

Trane’s cash and cash equivalent of $2.9 billion at the end of second-quarter 2021 was well below the long-term debt level of $4.5 billion. This indicates that the company does not have enough cash to meet this debt burden. However, the cash level can meet the short-term debt of $475 million.

Zacks Rank and Stocks to Consider

Trane currently carries a Zacks Rank #3 (Hold).

Some top-ranked stocks in the broader Zacks Business Services sector are Accenture (ACN - Free Report) , Cross Country Healthcare (CCRN - Free Report) and Paychex (PAYX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for Accenture, Cross Country Healthcare and Paychex is pegged at 10%, 9.9% and 8%, respectively.