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Here's Why You Should Buy Ingersoll-Rand (IR) Stock Now

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The Institute for Supply Management’s (ISM) manufacturing gauge was pegged at 57.7% this October, marking the 114th consecutive month of overall economic expansion. An above-50 ISM Index indicates growth in American manufacturing. The manufacturing companies have been buoyed by sturdy domestic economic conditions, of late. Economic policies adopted by the Trump administration, including its December-enacted corporate tax overhaul and impetus to streamline business regulations, have aided in steaming up corporate spending among most of these companies.

Against this backdrop, allocating your hard-earned money in selective manufacturing industrial stocks will ensure better returns. Among the numerous potential gainers within the space, adding Ingersoll-Rand Plc (IR - Free Report) to your portfolio will bear fruit. This stock currently carries a favorable Zacks Rank #2 (Buy).

Reasons for the Solid Run

Solid Top-Line Prospects: Ingersoll's top-line results improved 10% year over year organically in third-quarter 2018. The company believes stellar sales from the Commercial and Residential HVAC markets, as well as strength in the Transport Solutions, Industrial Fluid Management and Material Handling businesses will bolster its revenues in the quarters ahead. Moreover, new product-development investments will likely support the upside. Notably, Ingersoll raised its organic revenue growth view for 2018 from 3-3.5% to the 7-8% range. In addition to this, robust booking growth in 2018 paints a solid backlog picture in 2019 for Ingersoll. Per our estimates, the company’s year-over-year revenue growth is currently pegged at 9.9% and 5% for 2018 and 2019, respectively.

Profitability: Ingersoll has pulled off a positive average earnings surprise of 5.55% in the past four quarters. The company believes robust sales volume, increased productivity and pricing actions will continue to boost the company’s profitability in the upcoming quarters. Notably, new investments made toward footprint-optimization initiatives are expected to trim costs and expand the company’s near-term margins. Notably, Ingersoll raised its earnings view for 2018 from $5.00-$5.50 per share to the $5.55-$5.60 per share band. Per our estimates, the company’s year-over-year earnings growth is currently pegged at 23.7% and 13.3% for 2018 and 2019, respectively.

Inorganic Stance: Ingersoll intends to boost its near-term revenues and profitability on the back of acquisitions & mergers. On a year-to-date basis, the company has deployed nearly $280 million for mergers & acquisitions. In this context, the buyout of ICS Cool Energy (January 2018) and Trane Mitsubishi joint venture (inked in January 2018) are worth mentioning. Both these moves will likely continue to strengthen Ingersoll’s competency, going forward.

Beneficial to Shareholders: Ingersoll tries to provide higher value to its shareholders in the form of dividend and share-buyback offers. So far in fiscal 2019 (mention when the year ends), the company has returned roughly $850 million cash to its shareholders through share buybacks and dividends. Moreover, this October, Ingersoll rolled out share-repurchase program through which it plans to buy nearly $1.5 billion worth common stock.

Price Performance: On a month-to-date basis, Ingersoll’s shares have gained 5.9%, outperforming 2.7% returns yielded by the industry and 0.3% growth recorded by the benchmark S&P 500 index.

Other Stocks to Consider

Some other top-ranked stocks in the same space are listed below:

DXP Enterprises, Inc. (DXPE - Free Report) sports a Zacks Rank #1 (Strong Buy), at present. The company generated an average positive earnings surprise of 112.62% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Luxfer Holdings PLC (LXFR - Free Report) also flaunts a Zacks Rank of 1. The company delivered an average positive earnings surprise of 24.27% in the preceding four quarters.

Applied Industrial Technologies, Inc. (AIT - Free Report) holds a Zacks Rank of 2. The company came up with an average positive earnings surprise of 11.67% during the same time frame.

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