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Trane Technologies (TT) Up 5.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Trane Technologies (TT - Free Report) . Shares have added about 5.8% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Trane Technologies Q3 Earnings & Revenues Top Estimates
Adjusted EPS (excluding 7 cents from non-recurring items) of $2.79 surpassed the Zacks Consensus Estimate by 4.9% and increased 22.9% year over year.
Revenues of $4.8 billion beat the consensus mark by 2.1% and improved 12% year over year on a reported basis and 9% organically. Bookings were up 10% year over year on a reported basis and 8% organically.
Revenues and Bookings
The Americas segment generated revenues of $3.8 billion, which surpassed our estimate of $3.74 billion. Segmental top line jumped 12% year over year on a reported basis and 11% organically. Bookings were up 8% on a reported basis and 7% organically.
Europe, Middle East and Africa segment’s revenues reached $618.6 million, up 21% year over year on a reported basis and 3% organically. We projected the metric to be $569.2 million. Bookings were up 29% year over year on a reported basis and 12% organically.
Revenues from the Asia Pacific segment were $376.3 million, remaining flat year over year on a reported basis. It inched down 1% on an organic basis and missed our prediction of $428.2 million. Bookings of $400.2 million increased 12% on a reported basis as well as organically.
Margin Performance
Adjusted EBITDA amounted to $954 million, up 18% year over year. Adjusted EBITDA margin improved 100 basis points (bps) to 19.5%. Adjusted operating income of $879 million increased 21% year over year. Adjusted operating margin extended 130 bps to 18%.
Key Balance Sheet and Cash Flow Figures
Trane Technologies ended the quarter with a cash balance of $960 million compared with $664 billion in the previous quarter. The debt balance was $4.47 billion compared with the previous quarter’s $5 billion. It generated $922 million of cash from operating activities and a free cash outflow of $861 million in the reported quarter.
Raised 2023 Guidance
The company currently expects revenues to rise approximately 10-11% on a reported basis compared with the previous guidance of a 10% increase. It now projects revenue growth to be 8-9% on an organic basis compared with the prior projection of 8%.
Adjusted EPS is suggested to be at $9.00 compared with the earlier anticipation of $8.8-$8.9. The Zacks Consensus Estimate is pegged at $8.87.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Trane Technologies has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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.
Outlook
Trane Technologies has a Zacks Rank #2 (Buy). We expect an above average 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, Lumen (LUMN - Free Report) , has gained 23.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Lumen reported revenues of $3.64 billion in the last reported quarter, representing a year-over-year change of -17.1%. EPS of -$0.09 for the same period compares with $0.14 a year ago.
For the current quarter, Lumen is expected to post a loss of $0.01 per share, indicating a change of -102.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -166.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Lumen. Also, the stock has a VGM Score of C.
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Trane Technologies (TT) Up 5.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Trane Technologies (TT - Free Report) . Shares have added about 5.8% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Trane Technologies Q3 Earnings & Revenues Top Estimates
Trane Technologies plc reported better-than-expected third-quarter 2023 results.
Adjusted EPS (excluding 7 cents from non-recurring items) of $2.79 surpassed the Zacks Consensus Estimate by 4.9% and increased 22.9% year over year.
Revenues of $4.8 billion beat the consensus mark by 2.1% and improved 12% year over year on a reported basis and 9% organically. Bookings were up 10% year over year on a reported basis and 8% organically.
Revenues and Bookings
The Americas segment generated revenues of $3.8 billion, which surpassed our estimate of $3.74 billion. Segmental top line jumped 12% year over year on a reported basis and 11% organically. Bookings were up 8% on a reported basis and 7% organically.
Europe, Middle East and Africa segment’s revenues reached $618.6 million, up 21% year over year on a reported basis and 3% organically. We projected the metric to be $569.2 million. Bookings were up 29% year over year on a reported basis and 12% organically.
Revenues from the Asia Pacific segment were $376.3 million, remaining flat year over year on a reported basis. It inched down 1% on an organic basis and missed our prediction of $428.2 million. Bookings of $400.2 million increased 12% on a reported basis as well as organically.
Margin Performance
Adjusted EBITDA amounted to $954 million, up 18% year over year. Adjusted EBITDA margin improved 100 basis points (bps) to 19.5%. Adjusted operating income of $879 million increased 21% year over year. Adjusted operating margin extended 130 bps to 18%.
Key Balance Sheet and Cash Flow Figures
Trane Technologies ended the quarter with a cash balance of $960 million compared with $664 billion in the previous quarter. The debt balance was $4.47 billion compared with the previous quarter’s $5 billion. It generated $922 million of cash from operating activities and a free cash outflow of $861 million in the reported quarter.
Raised 2023 Guidance
The company currently expects revenues to rise approximately 10-11% on a reported basis compared with the previous guidance of a 10% increase. It now projects revenue growth to be 8-9% on an organic basis compared with the prior projection of 8%.
Adjusted EPS is suggested to be at $9.00 compared with the earlier anticipation of $8.8-$8.9. The Zacks Consensus Estimate is pegged at $8.87.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Trane Technologies has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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.
Outlook
Trane Technologies has a Zacks Rank #2 (Buy). We expect an above average 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, Lumen (LUMN - Free Report) , has gained 23.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Lumen reported revenues of $3.64 billion in the last reported quarter, representing a year-over-year change of -17.1%. EPS of -$0.09 for the same period compares with $0.14 a year ago.
For the current quarter, Lumen is expected to post a loss of $0.01 per share, indicating a change of -102.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -166.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Lumen. Also, the stock has a VGM Score of C.