It has been about a month since the last earnings report for Trane Technologies (
TT Quick Quote TT - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Trane Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Trane Technologies Q1 Earnings & Revenues Top Estimates
Trane Technologies reported better-than-expected first-quarter 2023 results.
Adjusted EPS of $1.41 surpassed the Zacks Consensus Estimate by 6% and our estimate by 7.6%. The bottom line increased 25.9% year over year. Revenues of $3.7 billion beat the consensus mark by 0.8% and our estimate by 1.1%. The top line increased 9.3% year over year on a reported basis and 9% organically. Bookings were down 1% year over year on a reported basis as well as organically. Revenues and Bookings
The Americas segment’s revenues of $2.9 billion increased 9% year over year on a reported basis and 8% organically. Bookings were down 4% on a reported basis as well as organically, at $3.3 billion.
Europe, Middle East and Africa segment’s revenues came in at $510.5 million, up 16% year over year on a reported basis and 15% organically. Bookings were up 10% year over year on a reported basis as well as organically, at $591.7 million. Revenues from the Asia Pacific segment were up 5% year over year on a reported basis and 8% on an organic basis, to $294.3 million. Bookings of $390.1 million increased 11% on a reported basis and 13% organically. Margin Performance
Adjusted EBITDA came in at $542 million, up 17% year over year. Adjusted EBITDA margin improved 100 basis points (bps) to 14.8%. Adjusted operating income of $472 million increased 23% year over year, with the adjusted operating margin improving 140 bps to 12.9%.
Key Balance Sheet and Cash Flow Figures
Trane ended the quarter with a cash balance of $693 million compared with $1.2 billion in the previous quarter. The debt balance was $4.8 billion, flat with the previous quarter’s tally. It generated $17 million of cash from operating activities and a free cash outflow of $52 million in the quarter.
Raised 2023 Guidance
The company currently expects revenues to increase 9-10% on a reported basis compared with the previous expectation of a 7-9% increase. It now expects revenue growth to be 7-8% on an organic basis compared with the prior expectation of 6-8% growth.
Adjusted EPS is expected to be between $8.3 and $8.5 compared with the previous anticipation of $8.2 to $8.5. How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
At this time, Trane Technologies has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been 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.
Performance of an Industry Player
Trane Technologies belongs to the Zacks Technology Services industry. Another stock from the same industry, Seagate (
STX Quick Quote STX - Free Report) , has gained 11.2% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Seagate reported revenues of $1.86 billion in the last reported quarter, representing a year-over-year change of -33.6%. EPS of -$0.28 for the same period compares with $1.81 a year ago.
Seagate is expected to post a loss of $0.17 per share for the current quarter, representing a year-over-year change of -110.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.
Seagate has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.