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Here's Why Investing in Ingersoll Rand (IR) Stock Makes Sense
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Ingersoll Rand Inc. (IR - Free Report) is well poised for growth courtesy of strength across its end markets, strong product offerings, acquired assets and a sound capital-deployment strategy.
Image Source: Zacks Investment Research
This Zacks Rank #1 (Strong Buy) company has a market capitalization of $36.9 billion. In the past six months, the stock has appreciated 29.4% compared with the industry’s growth of 20.6%.
Let’s delve into the factors that make this company investment-worthy at the moment.
Strength in Businesses: Ingersoll Rand should benefit from its solid product portfolio, innovation capabilities and focus on boosting aftermarket businesses. The company continues to see higher orders across its product portfolio of compressors within the Industrial Technologies & Services unit. Also, the company expects orders for industrial vacuum and blower to improve moving ahead. For 2024, IR expects total revenues to increase 5-7% from the year-ago levels, while organic revenues are estimated to grow 2-4%.
Benefits From Acquisitions: The company’s acquisition of Friulair (February 2024) is expected to boost its air dryer business and add new chiller production capabilities, thereby boosting its Industrial Technologies and Services segment. The buyout enhanced IRs presence across food and beverage, and pharmaceutical end markets. In October 2023, the company acquired Slovakia-based Oxywise and Canada-based Fraserwoods, boosting its capabilities in the high-growth, sustainable end markets. Also, its acquisition of Howden Roots (in August 2023) expanded its compression and vacuum product offerings. For 2024, IR anticipates acquisitions to contribute $160 million to total revenues.
Shareholder-Friendly Policies: Ingersoll Rand is committed to rewarding shareholders through dividend payouts and share repurchases. In 2023, the company paid dividends of $32.4 million and repurchased shares worth $263 million. Strong free cash flow generation supports the company’s shareholder-friendly activities. In 2023, it generated free cash flow of $1.3 billion, marking an increase of 65% year over year.
Solid Liquidity Position: The company’s strong liquidity position adds to its strength. For instance, exiting 2023, Ingersoll Rand’s cash and cash equivalents totaled $1.6 billion, significantly higher than its short-term borrowings and current maturities of long-term debt of $30.6 million. This implies that the company has sufficient cash to meet its short-term debt obligations.
Applied Industrial delivered a trailing four-quarter average earnings surprise of 10.4%. In the past 60 days, the Zacks Consensus Estimate for AIT’s 2024 earnings has increased 1.7%.
Parker-Hannifin delivered a trailing four-quarter average earnings surprise of 14.4%. In the past 60 days, the Zacks Consensus Estimate for PH’s 2024 earnings has increased 3.1%.
Luxfer delivered a trailing four-quarter average earnings surprise of 82.7%. In the past 60 days, the Zacks Consensus Estimate for LXFR’s 2024 earnings has increased 111.3%.
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Here's Why Investing in Ingersoll Rand (IR) Stock Makes Sense
Ingersoll Rand Inc. (IR - Free Report) is well poised for growth courtesy of strength across its end markets, strong product offerings, acquired assets and a sound capital-deployment strategy.
Image Source: Zacks Investment Research
This Zacks Rank #1 (Strong Buy) company has a market capitalization of $36.9 billion. In the past six months, the stock has appreciated 29.4% compared with the industry’s growth of 20.6%.
Let’s delve into the factors that make this company investment-worthy at the moment.
Strength in Businesses: Ingersoll Rand should benefit from its solid product portfolio, innovation capabilities and focus on boosting aftermarket businesses. The company continues to see higher orders across its product portfolio of compressors within the Industrial Technologies & Services unit. Also, the company expects orders for industrial vacuum and blower to improve moving ahead. For 2024, IR expects total revenues to increase 5-7% from the year-ago levels, while organic revenues are estimated to grow 2-4%.
Benefits From Acquisitions: The company’s acquisition of Friulair (February 2024) is expected to boost its air dryer business and add new chiller production capabilities, thereby boosting its Industrial Technologies and Services segment. The buyout enhanced IRs presence across food and beverage, and pharmaceutical end markets. In October 2023, the company acquired Slovakia-based Oxywise and Canada-based Fraserwoods, boosting its capabilities in the high-growth, sustainable end markets. Also, its acquisition of Howden Roots (in August 2023) expanded its compression and vacuum product offerings. For 2024, IR anticipates acquisitions to contribute $160 million to total revenues.
Shareholder-Friendly Policies: Ingersoll Rand is committed to rewarding shareholders through dividend payouts and share repurchases. In 2023, the company paid dividends of $32.4 million and repurchased shares worth $263 million. Strong free cash flow generation supports the company’s shareholder-friendly activities. In 2023, it generated free cash flow of $1.3 billion, marking an increase of 65% year over year.
Solid Liquidity Position: The company’s strong liquidity position adds to its strength. For instance, exiting 2023, Ingersoll Rand’s cash and cash equivalents totaled $1.6 billion, significantly higher than its short-term borrowings and current maturities of long-term debt of $30.6 million. This implies that the company has sufficient cash to meet its short-term debt obligations.
Other Stocks to Consider
We have highlighted three other top-ranked stocks from the same space, namely Applied Industrial Technologies (AIT - Free Report) , Parker-Hannifin Corporation (PH - Free Report) and Luxfer Holdings plc (LXFR - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Industrial delivered a trailing four-quarter average earnings surprise of 10.4%. In the past 60 days, the Zacks Consensus Estimate for AIT’s 2024 earnings has increased 1.7%.
Parker-Hannifin delivered a trailing four-quarter average earnings surprise of 14.4%. In the past 60 days, the Zacks Consensus Estimate for PH’s 2024 earnings has increased 3.1%.
Luxfer delivered a trailing four-quarter average earnings surprise of 82.7%. In the past 60 days, the Zacks Consensus Estimate for LXFR’s 2024 earnings has increased 111.3%.