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Ingersoll (IR) Up 3.7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Ingersoll Rand (IR - Free Report) . Shares have added about 3.7% 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 drivers.
Ingersoll Rand reported second-quarter 2023 adjusted earnings of 65 cents per share, which beat the Zacks Consensus Estimate of earnings of 54 cents per share. The bottom line increased 30% year over year.
Total revenues of $1,686.5 million outperformed the consensus estimate of $1,581 million. The top line increased 17.1% year over year on a 12.4% rise in organic revenues. Acquisitions contributed 5.9% to revenues while foreign currency movements had an adverse impact of 1.2%.
Orders in the quarter totaled $1,737.4 million, up 8.7% from the year-ago quarter. Organically orders increased 4.6%.
Segmental Discussion
The Industrial Technologies & Services segment generated revenues of $1,378.4 million, accounting for 81.7% of net revenues in the reported quarter. Sales increased 19.8% year over year on 14.4% growth in organic sales. Acquisitions contributed 6.8% while movement in foreign currencies had a negative impact of 1.4%. The segment’s orders in the quarter were up 12.8% (up 8.2% organically). Adjusted EBITDA increased 29.3% year over year to $377.5 million. Our estimate for adjusted EBITDA was $319.3 million.
The Precision & Science Technologies segment’s revenues totaled $308.1 million, representing 18.3% of net revenues in the quarter. Our estimate for segmental revenues was $298.5 million. On a year-over-year basis, the segment’s revenues increased 6.5%. Organic sales grew 4.6%. Acquisitions had a positive impact of 2.5% while movement in foreign currencies had a negative impact of 0.6%. The segment’s orders were down 7.9% (down 10.2% organically). Adjusted EBITDA increased 15.8% year over year to $90.0 million. Our estimate for adjusted EBITDA was $88.9 million.
Margin Profile
In the quarter under review, IR's cost of sales increased 13.4% year over year to $989.0 million. Selling and administrative expenses increased 14.5% to $315.6 million.
Adjusted EBITDA in the quarter increased 26.5% year over year to $467.5 million. The margin increased to 27.7% from 25.7% in the year-ago period.
On a segmental basis, the adjusted EBITDA margin increased 200 basis points (bps) year over year to 27.4% for the Industrial Technologies & Services segment. The same increased 240 bps to 29.2% for the Precision & Science Technologies segment.
Balance Sheet & Cash Flow
While exiting the second quarter of 2023, Ingersoll Rand had cash and cash equivalents of $1,178.1 million, compared with $1,613.0 million recorded at the end of December 2022. Long-term debt (less of current maturities) was $2,698.5 million, compared with $2,716.1 million in December 2022.
In the first six months of 2023, the company paid out dividends of $16.2 million and repurchased treasury stocks worth $132.8 million in the same time period.
In the same time period, IR generated net cash of $398.7 million from operating activities, up 68.8% year over year. Capital expenditure totaled $47.2 million, compared with $39.3 million in the year-ago quarter. Free cash flow increased 78.5% to $351.5 million.
2023 Outlook Revised
The company has raised its outlook for 2023. Ingersoll Rand now expects revenues to increase 12-14%, compared with 10-12% predicted earlier. Organic revenues are estimated to increase 8-10%, compared with 6-8% predicted before. The Industrial Technologies & Services segment’s revenues are predicted to increase 9-11% organically, compared with 6-8% expected earlier. The Precision & Science Technologies segment’s revenues are forecasted to climb 5-7% organically. Adverse foreign currency movements are expected to have no impact on total revenues.
Adjusted EBITDA is expected to be $1,690-$1,740 million, indicating an increase of 18-21% year over year, compared with $1,660-$1,710 million expected earlier. Adjusted earnings are anticipated to be $2.70-$2.80 per share, indicating an increase of 14-19% year over year. The midpoint of the guided range — $2.75 — lies above the Zacks Consensus Estimate of adjusted earnings of $2.70 per share. The company expected adjusted earnings of $2.64-$2.74 per share earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Ingersoll has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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. It comes with little surprise Ingersoll has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Ingersoll is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Barnes Group (B - Free Report) , a stock from the same industry, has gained 2.2%. The company reported its results for the quarter ended June 2023 more than a month ago.
Barnes Group reported revenues of $338.98 million in the last reported quarter, representing a year-over-year change of +5.5%. EPS of $0.58 for the same period compares with $0.56 a year ago.
Barnes Group is expected to post earnings of $0.55 per share for the current quarter, representing a year-over-year change of +12.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Barnes Group. Also, the stock has a VGM Score of C.
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Ingersoll (IR) Up 3.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Ingersoll Rand (IR - Free Report) . Shares have added about 3.7% 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 drivers.
Ingersoll Rand Q2 Earnings & Revenues Surpass Estimates
Ingersoll Rand reported second-quarter 2023 adjusted earnings of 65 cents per share, which beat the Zacks Consensus Estimate of earnings of 54 cents per share. The bottom line increased 30% year over year.
Total revenues of $1,686.5 million outperformed the consensus estimate of $1,581 million. The top line increased 17.1% year over year on a 12.4% rise in organic revenues. Acquisitions contributed 5.9% to revenues while foreign currency movements had an adverse impact of 1.2%.
Orders in the quarter totaled $1,737.4 million, up 8.7% from the year-ago quarter. Organically orders increased 4.6%.
Segmental Discussion
The Industrial Technologies & Services segment generated revenues of $1,378.4 million, accounting for 81.7% of net revenues in the reported quarter. Sales increased 19.8% year over year on 14.4% growth in organic sales. Acquisitions contributed 6.8% while movement in foreign currencies had a negative impact of 1.4%. The segment’s orders in the quarter were up 12.8% (up 8.2% organically). Adjusted EBITDA increased 29.3% year over year to $377.5 million. Our estimate for adjusted EBITDA was $319.3 million.
The Precision & Science Technologies segment’s revenues totaled $308.1 million, representing 18.3% of net revenues in the quarter. Our estimate for segmental revenues was $298.5 million. On a year-over-year basis, the segment’s revenues increased 6.5%. Organic sales grew 4.6%. Acquisitions had a positive impact of 2.5% while movement in foreign currencies had a negative impact of 0.6%. The segment’s orders were down 7.9% (down 10.2% organically). Adjusted EBITDA increased 15.8% year over year to $90.0 million. Our estimate for adjusted EBITDA was $88.9 million.
Margin Profile
In the quarter under review, IR's cost of sales increased 13.4% year over year to $989.0 million. Selling and administrative expenses increased 14.5% to $315.6 million.
Adjusted EBITDA in the quarter increased 26.5% year over year to $467.5 million. The margin increased to 27.7% from 25.7% in the year-ago period.
On a segmental basis, the adjusted EBITDA margin increased 200 basis points (bps) year over year to 27.4% for the Industrial Technologies & Services segment. The same increased 240 bps to 29.2% for the Precision & Science Technologies segment.
Balance Sheet & Cash Flow
While exiting the second quarter of 2023, Ingersoll Rand had cash and cash equivalents of $1,178.1 million, compared with $1,613.0 million recorded at the end of December 2022. Long-term debt (less of current maturities) was $2,698.5 million, compared with $2,716.1 million in December 2022.
In the first six months of 2023, the company paid out dividends of $16.2 million and repurchased treasury stocks worth $132.8 million in the same time period.
In the same time period, IR generated net cash of $398.7 million from operating activities, up 68.8% year over year. Capital expenditure totaled $47.2 million, compared with $39.3 million in the year-ago quarter. Free cash flow increased 78.5% to $351.5 million.
2023 Outlook Revised
The company has raised its outlook for 2023. Ingersoll Rand now expects revenues to increase 12-14%, compared with 10-12% predicted earlier. Organic revenues are estimated to increase 8-10%, compared with 6-8% predicted before. The Industrial Technologies & Services segment’s revenues are predicted to increase 9-11% organically, compared with 6-8% expected earlier. The Precision & Science Technologies segment’s revenues are forecasted to climb 5-7% organically. Adverse foreign currency movements are expected to have no impact on total revenues.
Adjusted EBITDA is expected to be $1,690-$1,740 million, indicating an increase of 18-21% year over year, compared with $1,660-$1,710 million expected earlier. Adjusted earnings are anticipated to be $2.70-$2.80 per share, indicating an increase of 14-19% year over year. The midpoint of the guided range — $2.75 — lies above the Zacks Consensus Estimate of adjusted earnings of $2.70 per share. The company expected adjusted earnings of $2.64-$2.74 per share earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Ingersoll has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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. It comes with little surprise Ingersoll has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Ingersoll is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Barnes Group (B - Free Report) , a stock from the same industry, has gained 2.2%. The company reported its results for the quarter ended June 2023 more than a month ago.
Barnes Group reported revenues of $338.98 million in the last reported quarter, representing a year-over-year change of +5.5%. EPS of $0.58 for the same period compares with $0.56 a year ago.
Barnes Group is expected to post earnings of $0.55 per share for the current quarter, representing a year-over-year change of +12.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Barnes Group. Also, the stock has a VGM Score of C.