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Why Is Ingersoll (IR) Up 8.9% Since Last Earnings Report?
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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 8.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is 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 catalysts.
Ingersoll Rand reported third-quarter 2023 adjusted earnings of 77 cents per share. The bottom line increased 24.2% year over year.
Total revenues of $1,738.9 million outperformed the consensus estimate of $1,689 million. The top line increased 14.7% year over year on a 6.4% rise in organic revenues. Acquisitions contributed 6.9% to revenues while foreign currency movements had a positive impact of 1.4%.
Orders in the quarter totaled $1,347 million, down 1% from the year-ago quarter. Organically orders decreased 9%.
Segmental Discussion
The Industrial Technologies & Services segment generated revenues of $1,428.4 million, accounting for 82.1% of net revenues in the reported quarter. Sales increased 19.1% year over year on 9.5% growth in organic sales.
Acquisitions contributed 8.2% while movement in foreign currencies had a positive impact of 1.4%. The segment’s orders in the quarter were down 0.6% (down 8.7% organically). Adjusted EBITDA increased 23.9% year over year to $ 410.9 million. Our estimate for adjusted EBITDA was $368.6 million.
The Precision & Science Technologies segment’s revenues totaled $310.5 million, representing 17.9% of net revenues in the quarter. Our estimate for segmental revenues was $351.9 million. On a year-over-year basis, the segment’s revenues decreased 1.8%. Organic sales declined 5.3%.
Acquisitions had a positive impact of 1.7% while movement in foreign currencies had a positive impact of 1.8%. The segment’s orders were down 2.8% (down 6% organically). Adjusted EBITDA increased 2.3% year over year to $94.2 million. Our estimate for adjusted EBITDA was $97.8 million.
Margin Profile
In the quarter under review, IR's cost of sales increased 6.3% year over year to $999.6 million. Selling and administrative expenses increased 13.1% to $315.2 million.
Adjusted EBITDA in the quarter increased 22.7% year over year to $461.5 million. The margin increased to 26.5% from 24.8% in the year-ago period.
On a segmental basis, the adjusted EBITDA margin increased 260 basis points (bps) year over year to 28.8% for the Industrial Technologies & Services segment. The same increased 120 bps to 30.3% for the Precision & Science Technologies segment.
Balance Sheet & Cash Flow
While exiting the third quarter of 2023, Ingersoll Rand had cash and cash equivalents of $1,197.5 million compared with $1,613.0 million recorded at the end of December 2022. Long-term debt (less of current maturities) was $2,699.3 million compared with $2,716.1 million in December 2022.
In the first nine months of 2023, the company paid out dividends of $24.3 million and repurchased treasury stocks worth $132.8 million in the same time period.
In the same time period, IR generated net cash of $796.0 million from operating activities, up 55.9% year over year. Capital expenditure totaled $75.8 million compared with $61.1 million in the year-ago quarter. Free cash flow increased 46% to $369 million.
2023 Outlook Revised
The company has raised its outlook for 2023. Ingersoll Rand now expects revenues to increase 14-16% compared with 12-14% predicted earlier. Organic revenues are estimated to increase 9-11% compared with 8-10% predicted before. The Industrial Technologies & Services segment’s revenues are predicted to increase 11-13% organically compared with 9-11% expected earlier. The Precision & Science Technologies segment’s revenues are forecasted to climb 1-3% organically. Adverse foreign currency movements are expected to have approximately 1% adverse impact on total revenues.
Adjusted EBITDA is expected to be $1,730 - $1,770 million, indicating an increase of 21-23% year over year, compared with $1,690-$1,740 million expected earlier. Adjusted earnings are anticipated to be $2.81-$2.89 per share, indicating an increase of 19-22% year over year. The company expected adjusted earnings to be $2.70-$2.80 per share earlier.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Ingersoll has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Ingersoll 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
Ingersoll is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Illinois Tool Works (ITW - Free Report) , a stock from the same industry, has gained 4.5%. The company reported its results for the quarter ended September 2023 more than a month ago.
Illinois Tool Works reported revenues of $4.03 billion in the last reported quarter, representing a year-over-year change of +0.5%. EPS of $2.55 for the same period compares with $2.35 a year ago.
For the current quarter, Illinois Tool Works is expected to post earnings of $2.38 per share, indicating a change of +1.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.6% over the last 30 days.
Illinois Tool Works has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Why Is Ingersoll (IR) Up 8.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Ingersoll Rand (IR - Free Report) . Shares have added about 8.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is 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 catalysts.
Ingersoll Rand Q3 Earnings & Revenues Increase Y/Y
Ingersoll Rand reported third-quarter 2023 adjusted earnings of 77 cents per share. The bottom line increased 24.2% year over year.
Total revenues of $1,738.9 million outperformed the consensus estimate of $1,689 million. The top line increased 14.7% year over year on a 6.4% rise in organic revenues. Acquisitions contributed 6.9% to revenues while foreign currency movements had a positive impact of 1.4%.
Orders in the quarter totaled $1,347 million, down 1% from the year-ago quarter. Organically orders decreased 9%.
Segmental Discussion
The Industrial Technologies & Services segment generated revenues of $1,428.4 million, accounting for 82.1% of net revenues in the reported quarter. Sales increased 19.1% year over year on 9.5% growth in organic sales.
Acquisitions contributed 8.2% while movement in foreign currencies had a positive impact of 1.4%. The segment’s orders in the quarter were down 0.6% (down 8.7% organically). Adjusted EBITDA increased 23.9% year over year to $ 410.9 million. Our estimate for adjusted EBITDA was $368.6 million.
The Precision & Science Technologies segment’s revenues totaled $310.5 million, representing 17.9% of net revenues in the quarter. Our estimate for segmental revenues was $351.9 million. On a year-over-year basis, the segment’s revenues decreased 1.8%. Organic sales declined 5.3%.
Acquisitions had a positive impact of 1.7% while movement in foreign currencies had a positive impact of 1.8%. The segment’s orders were down 2.8% (down 6% organically). Adjusted EBITDA increased 2.3% year over year to $94.2 million. Our estimate for adjusted EBITDA was $97.8 million.
Margin Profile
In the quarter under review, IR's cost of sales increased 6.3% year over year to $999.6 million. Selling and administrative expenses increased 13.1% to $315.2 million.
Adjusted EBITDA in the quarter increased 22.7% year over year to $461.5 million. The margin increased to 26.5% from 24.8% in the year-ago period.
On a segmental basis, the adjusted EBITDA margin increased 260 basis points (bps) year over year to 28.8% for the Industrial Technologies & Services segment. The same increased 120 bps to 30.3% for the Precision & Science Technologies segment.
Balance Sheet & Cash Flow
While exiting the third quarter of 2023, Ingersoll Rand had cash and cash equivalents of $1,197.5 million compared with $1,613.0 million recorded at the end of December 2022. Long-term debt (less of current maturities) was $2,699.3 million compared with $2,716.1 million in December 2022.
In the first nine months of 2023, the company paid out dividends of $24.3 million and repurchased treasury stocks worth $132.8 million in the same time period.
In the same time period, IR generated net cash of $796.0 million from operating activities, up 55.9% year over year. Capital expenditure totaled $75.8 million compared with $61.1 million in the year-ago quarter. Free cash flow increased 46% to $369 million.
2023 Outlook Revised
The company has raised its outlook for 2023. Ingersoll Rand now expects revenues to increase 14-16% compared with 12-14% predicted earlier. Organic revenues are estimated to increase 9-11% compared with 8-10% predicted before. The Industrial Technologies & Services segment’s revenues are predicted to increase 11-13% organically compared with 9-11% expected earlier. The Precision & Science Technologies segment’s revenues are forecasted to climb 1-3% organically. Adverse foreign currency movements are expected to have approximately 1% adverse impact on total revenues.
Adjusted EBITDA is expected to be $1,730 - $1,770 million, indicating an increase of 21-23% year over year, compared with $1,690-$1,740 million expected earlier. Adjusted earnings are anticipated to be $2.81-$2.89 per share, indicating an increase of 19-22% year over year. The company expected adjusted earnings to be $2.70-$2.80 per share earlier.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Ingersoll has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Ingersoll 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
Ingersoll is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Illinois Tool Works (ITW - Free Report) , a stock from the same industry, has gained 4.5%. The company reported its results for the quarter ended September 2023 more than a month ago.
Illinois Tool Works reported revenues of $4.03 billion in the last reported quarter, representing a year-over-year change of +0.5%. EPS of $2.55 for the same period compares with $2.35 a year ago.
For the current quarter, Illinois Tool Works is expected to post earnings of $2.38 per share, indicating a change of +1.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.6% over the last 30 days.
Illinois Tool Works has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.