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Ingersoll-Rand (IR) Up 1.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Ingersoll-Rand (IR - Free Report) . Shares have added about 1.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ingersoll-Rand 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.
Second-Quarter 2018 Results
Ingersoll reported better-than-expected results for second-quarter 2018.
Earnings/ Revenues
Quarterly adjusted earnings came in at $1.85 per share, up 24% year over year. The bottom line also outpaced the Zacks Consensus Estimate of $1.72.
Revenues in the second quarter came in at $4,358 million, up 11% year over year. The top line also exceeded the Zacks Consensus Estimate of $4,212 million. Revenues grew 9% year over year organically.
Bookings in the quarter were $4,549 million, up 18% year over year.
Segmental Break-Up
Revenues in the Climate segment came in at $3,494 million, up 11% year over year. The top-line performance of the Industrial segment improved 13%, year over year, to $864 million.
Costs/Margins
Cost of goods sold in the reported quarter came in at $2,964.1 million, up 11.7% year over year. Selling and administrative expenses during the quarter were $753.3 million, up 8% from the year-ago tally.
Quarterly adjusted operating margin expanded 50 basis points to 14.9%.
Balance Sheet/Cash Flow
Exiting the reported quarter, Ingersoll had cash and cash equivalents of $969.5 million, down from $1,549.4 million as of Dec 31, 2017. Long-term debt came in at $3,738.9 million, up from $2,957 million recorded at the end of 2017.
In first-half 2018, the company generated $377.7 million cash from operating activities, lower than $405.5 million cash secured in the year-ago period. Capital expenditure was $163.4 million, up from $79.5 million recorded in the prior-year period.
Ingersoll repurchased 5.6 million shares for $500 million in the first six months of 2018.
Outlook
With diligent execution of operational plans and healthy end markets, Ingersoll delivered double-digit bookings and revenue growth in both segments. The company is poised to grow on the back of its unique capital-allocation strategy. Ingersoll currently anticipates securing earnings of $5.00-$5.50 per share in 2018, as against the prior view of $5.00-$5.20 per share. Organic top-line growth for the full year is projected at 7-8%, higher than the previous guidance of 3-3.5%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Ingersoll-Rand 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.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ingersoll-Rand has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Ingersoll-Rand (IR) Up 1.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Ingersoll-Rand (IR - Free Report) . Shares have added about 1.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ingersoll-Rand 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.
Second-Quarter 2018 Results
Ingersoll reported better-than-expected results for second-quarter 2018.
Earnings/ Revenues
Quarterly adjusted earnings came in at $1.85 per share, up 24% year over year. The bottom line also outpaced the Zacks Consensus Estimate of $1.72.
Revenues in the second quarter came in at $4,358 million, up 11% year over year. The top line also exceeded the Zacks Consensus Estimate of $4,212 million. Revenues grew 9% year over year organically.
Bookings in the quarter were $4,549 million, up 18% year over year.
Segmental Break-Up
Revenues in the Climate segment came in at $3,494 million, up 11% year over year. The top-line performance of the Industrial segment improved 13%, year over year, to $864 million.
Costs/Margins
Cost of goods sold in the reported quarter came in at $2,964.1 million, up 11.7% year over year. Selling and administrative expenses during the quarter were $753.3 million, up 8% from the year-ago tally.
Quarterly adjusted operating margin expanded 50 basis points to 14.9%.
Balance Sheet/Cash Flow
Exiting the reported quarter, Ingersoll had cash and cash equivalents of $969.5 million, down from $1,549.4 million as of Dec 31, 2017. Long-term debt came in at $3,738.9 million, up from $2,957 million recorded at the end of 2017.
In first-half 2018, the company generated $377.7 million cash from operating activities, lower than $405.5 million cash secured in the year-ago period. Capital expenditure was $163.4 million, up from $79.5 million recorded in the prior-year period.
Ingersoll repurchased 5.6 million shares for $500 million in the first six months of 2018.
Outlook
With diligent execution of operational plans and healthy end markets, Ingersoll delivered double-digit bookings and revenue growth in both segments. The company is poised to grow on the back of its unique capital-allocation strategy. Ingersoll currently anticipates securing earnings of $5.00-$5.50 per share in 2018, as against the prior view of $5.00-$5.20 per share. Organic top-line growth for the full year is projected at 7-8%, higher than the previous guidance of 3-3.5%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Ingersoll-Rand 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.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ingersoll-Rand has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.