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Here's Why Investors Should Retain Ingersoll Rand (IR) Now

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Ingersoll Rand Inc. (IR - Free Report) has been benefiting from strong orders for industrial vacuum and blower within the Industrial Technologies & Services unit. Also, stable orders for compressors have been proving beneficial for the segment. Going forward, growth in short-cycle orders along with strong book-and-ship orders is likely to be a tailwind for the Precision and Science Technologies segment.

For 2024, IR expects revenues to increase 4-6% from the year-ago levels. Management forecasts adjusted earnings in the range of $3.20-$3.30 per share compared with $2.96 reported in 2023.

The  acquisition of Friulair (February 2024) is expected to boost Ingersoll Rand’s air dryer business and add new chiller production capabilities, thereby aiding its Industrial Technologies and Services unit. The buyout enhanced IR's presence across food and beverage, and pharmaceutical end markets.

Also, in March 2024, IR entered into a definitive deal to purchase ILC Dover from New Mountain Capital, LLC. The inclusion of ILC Dover’s single-use solutions in biopharma and pharma production processes will strongly complement the company’s expertise in liquid handling technologies and positive displacement pumps. This will enable IR to set up a life sciences platform, which will likely generate revenues of $700 million, thus allowing it to boost its growth in the life sciences market. In first-quarter 2024, acquisitions contributed 3.4% to total revenues.

Management is focused on rewarding shareholders through dividend payouts and share repurchases. In the first three months of 2024, it paid out dividends of $8.1 million and repurchased treasury stocks worth $72.9 million. Also, in April 2024, its board of directors approved an additional $1 billion increase to the share repurchase authorization.

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In the past six months, this Zacks Rank #3 (Hold) company’s shares have risen 31% compared with the industry’s growth of 22.6%.

Despite the positives, the company has been witnessing weakness in the life sciences business due to lower demand environment in biopharma end markets. Also, softness in China wastewater end markets might hurt the segment’s performance in the near term.

Also, Ingersoll Rand has been grappling with escalating costs and expenses over time. Its cost of sales increased 11.2% year over year in 2023, while selling and administrative expenses hiked 16.1%. Also, in the first quarter, its selling and administrative expenses jumped 8.1% year over year.

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