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Trane Technologies (TT) Up 5.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Trane Technologies (TT - Free Report) . Shares have added about 5.3% 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 Q3 Earnings & Revenues Lag Estimates
Adjusted EPS of $1.8 misses the Zacks Consensus Estimate by 3.2% but increased 5% year over year. Revenues of $3.7 billion lagged the consensus mark by 2% but increased 6% year over year on a reported basis and 4% organically. Bookings were up 22% year over year on a reported basis and 20% organically, to $4.3 billion.
Revenues and Bookings Up in all Segments
The Americas segment’s revenues of $2.9 billion increased 6% year over year on a reported basis and 4% on an organic basis. Bookings increased 22% on a reported basis and 20% organically, to $3.3 billion.
Europe, Middle East and Africa (EMEA) segment’s revenues came in at $495 million, up 11% year over year on a reported basis and 8% organically. Bookings were up 29% on a reported basis and 25% organically, to $574.4 million.
Revenues from the Asia Pacific segment were up 3% year over year on a reported basis and 1% on an organic basis, to $314.5 million. Bookings of $372.1 million increased 14% on a reported basis and 11% organically.
Strong Margin Performance
Adjusted EBITDA came in at $670 million, up 2% year over year. Adjusted EBITDA margin declined 70 basis points (bps) to 18%. Adjusted operating income of $598 million increased 2% year over year with adjusted operating margin declining 60 bps to 16.1%.
Key Balance Sheet and Cash Flow Figures
Trane ended the quarter with cash balance of $2.7 billion compared with $2.9 billion at the end of the previous quarter. Debt balance was $4.8 billion compared with $5 billion in the previous quarter.
The company generated $1.2 billion of cash from operating activities while capital expenditures were $81 million. Free cash flow was $1.1 billion.
2021 Guidance
Trane expects revenues to increase 13.5% on a reported basis and 11% on an organic basis. Adjusted EPS is expected to be $6.05, up 36% year over year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Trane Technologies has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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, Trane Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Trane Technologies (TT) Up 5.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Trane Technologies (TT - Free Report) . Shares have added about 5.3% 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 Q3 Earnings & Revenues Lag Estimates
Trane Technologies reported lower-than-expected third-quarter 2021 results.
Adjusted EPS of $1.8 misses the Zacks Consensus Estimate by 3.2% but increased 5% year over year. Revenues of $3.7 billion lagged the consensus mark by 2% but increased 6% year over year on a reported basis and 4% organically. Bookings were up 22% year over year on a reported basis and 20% organically, to $4.3 billion.
Revenues and Bookings Up in all Segments
The Americas segment’s revenues of $2.9 billion increased 6% year over year on a reported basis and 4% on an organic basis. Bookings increased 22% on a reported basis and 20% organically, to $3.3 billion.
Europe, Middle East and Africa (EMEA) segment’s revenues came in at $495 million, up 11% year over year on a reported basis and 8% organically. Bookings were up 29% on a reported basis and 25% organically, to $574.4 million.
Revenues from the Asia Pacific segment were up 3% year over year on a reported basis and 1% on an organic basis, to $314.5 million. Bookings of $372.1 million increased 14% on a reported basis and 11% organically.
Strong Margin Performance
Adjusted EBITDA came in at $670 million, up 2% year over year. Adjusted EBITDA margin declined 70 basis points (bps) to 18%. Adjusted operating income of $598 million increased 2% year over year with adjusted operating margin declining 60 bps to 16.1%.
Key Balance Sheet and Cash Flow Figures
Trane ended the quarter with cash balance of $2.7 billion compared with $2.9 billion at the end of the previous quarter. Debt balance was $4.8 billion compared with $5 billion in the previous quarter.
The company generated $1.2 billion of cash from operating activities while capital expenditures were $81 million. Free cash flow was $1.1 billion.
2021 Guidance
Trane expects revenues to increase 13.5% on a reported basis and 11% on an organic basis. Adjusted EPS is expected to be $6.05, up 36% year over year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Trane Technologies has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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, Trane Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.