A month has gone by since the last earnings report for Trane Technologies (TT Quick QuoteTT - Free Report) . Shares have added about 2.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Trane Technologies 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.

Trane Technologies Beats on Q2 Earnings and Revenues

Trane Technologies reported better-than-expected second-quarter 2021 results.

Adjusted EPS of $1.92 beat the Zacks Consensus Estimate by 1.1% and increased 51.2% year over year. Revenues of $3.8 billion surpassed the consensus mark by 2.3% and increased 22% year over year on a reported basis and 18% organically. Bookings were up 34% year over year on a reported basis and 30% organically, to $4.4 billion.

Revenues and Bookings Up in all Segments

The Americas segment’s revenues of $3 billion increased 21% year over year on a reported basis and 19% on an organic basis. Bookings increased 31% on a reported basis and 29% organically, to $3.4 billion.

Europe, Middle East and Africa (EMEA) segment’s revenues came in at $523.2 million, up 40% year over on a reported basis and 28% organically. Bookings were up 67% on a reported basis and 53% organically, to $629.8 million.

Revenues from the Asia Pacific segment were up 8% year over year on a reported basis and 2% on an organic basis, to $334.9 million. Bookings of $394.9 million increased 18% on a reported basis and 12% organically.

Strong Margin Performance

Adjusted EBITDA came in at $731.4 million, up 34.6% year over year. Adjusted EBITDA margin improved 180 basis points (bps) to 19.1%. Adjusted operating income of $656.3 million increased 39% year over year with adjusted operating margin expanding 210 bps to 17.1%.

Key Balance Sheet and Cash Flow Figures

Trane ended the quarter with cash and cash equivalents balance of $2.9 billion compared with $2.8 billion at the end of the previous quarter. Long-term debt was $4.5 billion, flat sequentially.

The company generated $488.9 million of cash from operating activities and capital expenditures were $33.6 million. Free cash flow was $460.5 million.

Raised 2021 Guidance

Trane now expects revenues to increase 13.5% on a reported basis and 11% on an organic basis, compared with the previous expectation of an increase of 10.5% year over year on a reported basis and 9% on an organic basis. Adjusted EPS is now expected to be $6.05, up 36% year over year. Adjusted EPS was previously expected to be $6, up 35% year over year.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -6.31% due to these changes.

VGM Scores

At this time, Trane Technologies has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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