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Ingersoll Rand (IR - Free Report) is poised for growth on the back of a solid product portfolio, innovation capabilities and a focus on boosting aftermarket businesses. The company has been making continued investments to support growth in demand generation and the Industrial Internet of Things.
Solid demand and higher orders should drive IR’s Industrial Technologies & Services segment. The company continues to see higher orders across its product portfolio of compressors, vacuum and blowers, and power tools and lifting within the Industrial Technologies & Services unit. For 2023, the company expects segmental revenues to increase 11-13% organically.
Pricing actions and acquisition benefits bode well for Ingersoll Rand’s Precision & Science Technologies segment. Acquisitions had a positive impact of 1.7% on the segment’s revenues in the third quarter. The company anticipates Precision & Science Technologies revenues to climb 1-3% organically in 2023. For 2023, Ingersoll Rand expects total revenues to increase 14-16% year over year (12-14% increase was anticipated earlier). Organic revenues are estimated to increase 9-11% compared with the 8-10% rise expected earlier. The company forecasts adjusted earnings of $2.81-$2.89 per share for 2023 compared with $2.70-$2.80 expected earlier. The guided range indicates an increase of 19-22% year over year.
Ingersoll Rand’s commitment to reward shareholders through dividend payments and share buybacks is encouraging. In the first nine months of 2023, the company paid dividends of $24.3 million and repurchased shares worth $132.8 million. Strong free cash flow generation supports the company’s shareholder-friendly activities. In the first nine months of 2023, free cash flow jumped 60.2% year over year to $720.2 million.
Ingersoll Rand believes in expanding its market presence, solidifying its customer base and enhancing product offerings through acquisitions. In October 2023, the company acquired Slovakia-based Oxywise s.r.o. (Oxywise) and Canada-based Fraserwoods Fabrication and Machining Ltd. (Fraserwoods), boosting its capabilities in the high-growth, sustainable end markets. Both entities will be added to IR’s Industrial Technologies and Services (IT&S) segment.
In August 2023, Ingersoll Rand completed the acquisition of Howden Roots for approximately $300 million. The acquisition expands IR’s low-pressure compression and vacuum product offerings and adds centrifugal compression capabilities. Roots is part of IR’s Industrial Technologies & Services segment. Ingersoll Rand expects the transaction to yield adjusted EBITDA margins of more than 30% by the third year.
In January 2023, Ingersoll Rand completed the acquisition of SPX FLOW’s Air Treatment business, boosting its core compressor product offering through a complementary product portfolio of energy-efficient compressed air dryers, filters and other consumables. The Air Treatment business is part of IR’s IT&S segment. Ingersoll Rand expects significant synergy improvements to drive adjusted EBITDA margins to more than 30% by the third year.
However, cost inflation and supply-chain constraints are weighing on Ingersoll Rand’s operations. The company’s cost of sales increased 12.7% year over year in the first nine months of 2023 due to high raw material costs. Selling and administrative expenses increased 14.9% in the same period. Escalating costs pose a threat to the company’s bottom line.
IR is exposed to headwinds arising from unfavorable movement in foreign currencies. For 2023, the company expects adverse foreign currency movements to hurt sales by approximately 1%.
Weakness in the life sciences business due to continued softness in oxygen concentration and biopharma end markets raises concerns for the Precision & Science Technologies segment, where orders declined 4.6% year over year in the first nine months of 2023. In the third quarter, revenues dipped 1.8% on a reported basis and 5.3% organically.
Zacks Rank & Key Picks
Ingersoll Rand carries a Zacks Rank #3 (Hold).
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Applied Industrial has an estimated earnings growth rate of 5.8% for the current fiscal year. Shares of the company have rallied 25.4% in the year-to-date period.
A. O. Smith Corporation (AOS - Free Report) presently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 14%, on average.
A. O. Smith has an estimated earnings growth rate of 19.4% for the current year. Shares of the company have gained 23.4% in the year-to-date period.
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Ingersoll Rand (IR) Stock Holds Promise Despite Headwinds
Ingersoll Rand (IR - Free Report) is poised for growth on the back of a solid product portfolio, innovation capabilities and a focus on boosting aftermarket businesses. The company has been making continued investments to support growth in demand generation and the Industrial Internet of Things.
Solid demand and higher orders should drive IR’s Industrial Technologies & Services segment. The company continues to see higher orders across its product portfolio of compressors, vacuum and blowers, and power tools and lifting within the Industrial Technologies & Services unit. For 2023, the company expects segmental revenues to increase 11-13% organically.
Pricing actions and acquisition benefits bode well for Ingersoll Rand’s Precision & Science Technologies segment. Acquisitions had a positive impact of 1.7% on the segment’s revenues in the third quarter. The company anticipates Precision & Science Technologies revenues to climb 1-3% organically in 2023. For 2023, Ingersoll Rand expects total revenues to increase 14-16% year over year (12-14% increase was anticipated earlier). Organic revenues are estimated to increase 9-11% compared with the 8-10% rise expected earlier. The company forecasts adjusted earnings of $2.81-$2.89 per share for 2023 compared with $2.70-$2.80 expected earlier. The guided range indicates an increase of 19-22% year over year.
Ingersoll Rand Inc. Price and Consensus
Ingersoll Rand Inc. price-consensus-chart | Ingersoll Rand Inc. Quote
Ingersoll Rand’s commitment to reward shareholders through dividend payments and share buybacks is encouraging. In the first nine months of 2023, the company paid dividends of $24.3 million and repurchased shares worth $132.8 million. Strong free cash flow generation supports the company’s shareholder-friendly activities. In the first nine months of 2023, free cash flow jumped 60.2% year over year to $720.2 million.
Ingersoll Rand believes in expanding its market presence, solidifying its customer base and enhancing product offerings through acquisitions. In October 2023, the company acquired Slovakia-based Oxywise s.r.o. (Oxywise) and Canada-based Fraserwoods Fabrication and Machining Ltd. (Fraserwoods), boosting its capabilities in the high-growth, sustainable end markets. Both entities will be added to IR’s Industrial Technologies and Services (IT&S) segment.
In August 2023, Ingersoll Rand completed the acquisition of Howden Roots for approximately $300 million. The acquisition expands IR’s low-pressure compression and vacuum product offerings and adds centrifugal compression capabilities. Roots is part of IR’s Industrial Technologies & Services segment. Ingersoll Rand expects the transaction to yield adjusted EBITDA margins of more than 30% by the third year.
In January 2023, Ingersoll Rand completed the acquisition of SPX FLOW’s Air Treatment business, boosting its core compressor product offering through a complementary product portfolio of energy-efficient compressed air dryers, filters and other consumables. The Air Treatment business is part of IR’s IT&S segment. Ingersoll Rand expects significant synergy improvements to drive adjusted EBITDA margins to more than 30% by the third year.
However, cost inflation and supply-chain constraints are weighing on Ingersoll Rand’s operations. The company’s cost of sales increased 12.7% year over year in the first nine months of 2023 due to high raw material costs. Selling and administrative expenses increased 14.9% in the same period. Escalating costs pose a threat to the company’s bottom line.
IR is exposed to headwinds arising from unfavorable movement in foreign currencies. For 2023, the company expects adverse foreign currency movements to hurt sales by approximately 1%.
Weakness in the life sciences business due to continued softness in oxygen concentration and biopharma end markets raises concerns for the Precision & Science Technologies segment, where orders declined 4.6% year over year in the first nine months of 2023. In the third quarter, revenues dipped 1.8% on a reported basis and 5.3% organically.
Zacks Rank & Key Picks
Ingersoll Rand carries a Zacks Rank #3 (Hold).
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Applied Industrial Technologies (AIT - Free Report) presently carries a Zacks Rank #2 (Buy). The company pulled off a trailing four-quarter earnings surprise of 13.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Applied Industrial has an estimated earnings growth rate of 5.8% for the current fiscal year. Shares of the company have rallied 25.4% in the year-to-date period.
A. O. Smith Corporation (AOS - Free Report) presently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 14%, on average.
A. O. Smith has an estimated earnings growth rate of 19.4% for the current year. Shares of the company have gained 23.4% in the year-to-date period.