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Why Is Ingersoll-Rand (IR) Up 6% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for Ingersoll-Rand PLC (IR - Free Report) . Shares have added about 6% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is IR 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 catalysts.

Ingersoll Beats Both Q1 Earnings & Revenue Estimates

Ingersoll started 2018 on a positive note, reporting solid first-quarter 2018 results with adjusted earnings from continuing operations of 70 cents per share compared with 57 cents in the year-earlier quarter. The healthy year-over-year improvement in adjusted earnings was largely driven by top-line growth. Adjusted earnings comfortably beat the Zacks Consensus Estimate of 62 cents.

GAAP earnings for the quarter were $120.4 million or 48 cents per share compared with $117.1 million or 45 cents per share in the year-ago period. The year-over-year increase in GAAP earnings was primarily attributable to diligent execution of operational plans

Quarterly revenues were $3,384.5 million, up from $3,000.6 million in the year-ago quarter largely driven by double-digit bookings on healthy growth dynamics. Revenues exceeded the Zacks Consensus Estimate of $3,161 million. Organic revenues improved 8% year over year.

Segmental Performance

The Climate segment recorded revenues of $2,610 million compared with $2,324 million in the year-ago quarter. The upside was driven by broad based revenue improvement across all geographic regions and businesses.

The Industrial segment reported revenues of $775 million in the quarter, up from $676 million in the prior-year quarter with growth in all products and services.

Margins

Operating margin was flat at 7.2%, while adjusted operating margin improved to 8.5% from 8.3% in the prior-year quarter due to strong volume, positive price and productivity partially offset by material and freight inflation. Adjusted operating margin for the Climate segment was 10.1% compared with 10.6% in the year-ago quarter owing to higher material price inflation. Adjusted operating margin for the Industrial segment was 12.3%, up from 10.4% in the year-ago quarter driven by higher mix of services, new product development and cost reductions.

Balance Sheet and Cash Flow

At quarter end, cash and cash equivalents were $1,175.1 million while long-term debt was $3,745.5 million. Net cash utilized in operating activities for the first three months of 2018 was $66.2 million compared with cash utilization of $43.4 million in the prior-year period. Ingersoll spent $250 million on share buybacks during the quarter to repurchase 2.8 million shares.

Moving Forward
 
Ingersoll expects to exceed the high end of its prior guidance for 2018 and will offer an update of its guidance in concurrence with the second-quarter results.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter compared to two lower.

Ingersoll-Rand PLC (Ireland) Price and Consensus

VGM Scores

At this time, IR has a poor Growth Score of F, however its Momentum is doing a bit better with a D. Charting a somewhat similar path, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise IR has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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