Back to top

Image: Bigstock

Here's Why Ingersoll Rand (IR) Stock is an Attractive Pick

Read MoreHide Full Article

Ingersoll Rand Inc. (IR - Free Report) is poised to gain from strength in the Industrial Technologies & Services segment, acquired assets and shareholder-friendly moves.

Let’s delve into the factors that make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.

Business Strength: Exposure to various end markets, including industrial manufacturing, mining & construction, energy, transportation, medical and laboratory sciences, food and beverage packaging, as well as chemical processing, should help Ingersoll Rand offset weaknesses associated with a single market. The company continues to witness higher orders across its product portfolio of industrial vacuums and blowers along with stable orders for compressors, which will drive the Industrial Technologies & Services segment.

Growth in short-cycle orders, and strong book-and-ship orders are likely to be tailwinds for the Precision and Science Technologies segment. The company remains positive about the underlying health of the segment with stabilizing organic order growth.

Expansion Initiatives: Ingersoll Rand believes in expanding its market presence, solidifying its customer base and enhancing product offerings through acquisitions. In the first quarter, acquisitions contributed 3.4% to total revenues. In March 2024, it entered into a definitive deal to purchase ILC Dover from New Mountain Capital, LLC for $2.325 billion in cash upfront. The inclusion of ILC Dover’s single-use solutions in biopharma and pharma production processes will strongly complement the company expertise in liquid handling technologies and positive displacement pumps. ILC Dover will be incorporated into the Precision & Science Technologies segment.

The acquisition of Friulair (February 2024) will increase the scale of Ingersoll Rand’s air dryer business and add new chiller production capabilities, thereby boosting its Industrial Technologies and Services segment. The buyout will enhance the company’s presence across food and beverage, and pharmaceutical end markets. In October 2023, it acquired Slovakia-based Oxywise s.r.o. (Oxywise) and Canada-based Fraserwoods Fabrication and Machining Ltd., thus boosting its capabilities in high-growth sustainability end markets. Both entities have been added to the Industrial Technologies and Services segment.

Rewards to Shareholders: The company’s commitment to rewarding shareholders through dividend payments and share buybacks is encouraging. In 2023, it paid dividends of $32.4 million and repurchased shares worth $263 million. In the first three months of 2024, it paid dividends of $8.1 million and repurchased treasury stocks worth $72.9 million. In April, Ingersoll Rand’s board of directors approved an additional $1 billion increase to the share repurchase authorization. This is incremental to the amount remaining on the existing $750 million authorization.

Northward Estimate Revision: The Zacks Consensus Estimate for IR’s 2024 has been revised 1.9% upward in the past 60 days.

Price Performance: Shares of Ingersoll Rand have gained 22.8% in the past six months, outperforming the industry’s 9.4% growth.

Zacks Investment Research
Image Source: Zacks Investment Research

Other Stocks to Consider

Some other top-ranked companies from the Industrial Products sector are discussed below.

Belden Inc. (BDC - Free Report) presently carries a Zacks Rank of 2 and has a trailing four-quarter earnings surprise of 14.7%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The consensus estimate for BDC’s 2024 earnings has increased 8.3% in the past 60 days. Shares of Belden have gained 29.6% in the past six months.

Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 8.2%.

The consensus estimate for AIT’s fiscal 2024 earnings has improved 1.4% in the past 60 days. The stock has risen 11.8% in the past six months.

Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. CR delivered a trailing four-quarter earnings surprise of 15.2%, on average.

The Zacks Consensus Estimate for CR’s 2024 earnings has increased 4% in the past 60 days. Its shares have gained 32.5% in the past six months.

Published in