Ingersoll Rand Inc. (NYSE: $IR) is a multinational industrial equipment manufacturer that produces flow control and compression equipment, spare parts, services, and consumables.
Based in Davidson, NC, the company was formed in February 2020 out of the merger of a spinoff of the industrial segment of Ingersoll-Rand plc and Gardener Denver. The company’s products are available in under 40+ brands across major global markets.
On Tuesday, April 9, 2024, the stock dipped slightly, marking the second consecutive day of losses after what has been a general upward trend in recent years.
Ingersoll Announces Date for Q1 2024 Results
On April Tuesday, April 9, Ingersoll Rand announced the date for its first quarter fiscal 2024 earnings results. The company stated that it would host a conference call on May 3, 2024, at 8 AM EDT.
Debt Refinancing Plans
According to a Wednesday, April 3, 2024, report by the WSJ, Ingersoll Rand is close to converting all its debt into unsecured debt. The move could lower its interest costs, strengthening its credit rating. The move follows a credit rating upgrade in 2023.
The WSJ noted that once a firm achieves an investment-grade rating, it can benefit from lower interest rates for new, unsecured debt compared to the secured debt on its balance sheet.
In August 2023, Moody’s upgraded Ingersoll Rand’s credit rating to Baa3, which is the lowest rating for an investment grade rating. In March 2024, Moody’s reiterated its rating for the company.
Following Moody’s upgrade, Ingersoll Rand converted $1.5 billion of $2.7 billion in total debt to unsecured debt. Commenting on the decision at the time, CEO Kini stated, “We would expect to get a better rate profile as we move forward and continue to refinance our debt portfolio comparatively speaking to what we had historically.”
Expansion Through Acquisitions
Since the February 2020 merger, Ingersoll Rand has been on a buying spree. It has acquired over 40 companies thus far, which are often smaller outfits. As of February 2024, the company had signed 10 more letters of intent for the potential acquisition of smaller companies.
On April 3, 2024, the company announced the acquisition of Controlled Fluidics and Ethafilter. The former has two sites in the US and specializes in high-performance plastic bonding for the aerospace sector, life sciences, medical, and industrial use cases. Ethafilter, based in Italy, focuses on filters and filter elements.
On March 25, it announced the acquisition of ILC Denver, expanding its presence in the life sciences industry.
Ingersoll Rand’s Strong Financial Position
In its most recent fourth quarter and fiscal 2023 results, the company reported orders of $1.67 billion, a 13% year-over-year increase. It also reported revenue of $1.82 billion, a 12% year-over-year increase. The company reported a net income of $230 million or an EPS of $0.56.
Q4 adjusted EBITDA came in at $ $501 million, a 19% increase, while the margin was up 160 basis points to 27.5%. It ended the quarter with $581 million in cash flow from operations and $552 million in free cash flow.
For the full year fiscal 2023, the company reported orders of $6.82 billion, a 7% Y/Y increase, and a revenue of $6.88 billion, a 16% Y/Y increase. Net income for the full year came in at $779 million, or an EPS of $1.90.
The full-year adjusted EBITDA grew 25% to $1.79 billion, while the margin grew 170 basis points to 26%. Meanwhile, full-year operating cash flow was $1.38 billion, while free cash flow was $1.27 billion, a 65% year-over-year increase.
As of December 2023, the company had $3.6 billion in liquidity, including $1.6 billion in cash on hand and $2 billion available under credit facilities.
Fiscal 2024 Forecast
For the full year, Ingersoll Rand expects revenue to grow 5%-7% and adjusted EBITDA to grow by 7%-11% to $1.915 billion-$1.975 billion. The company forecasts full-year EPS will rise 6%- 9% to $3.14-$3.24.
Ingersoll Rand Stock Performance
IR shares closed trading on Tuesday, April 9, at $93.50 per share, marking the second consecutive day of losses for the shares. While Tuesday was an overall mixed trading session, IR shares performed worse than the market, with the SPX rising 0.14% while the DJIA fell 0.2%. During the early morning trading session on Wednesday April 10, the losses continued with IR shares dropping 0.42% of their value to $93.11.
However, IR shares have performed well overall in recent years. For instance, the shares are up 21.86% YTD, 237.18% in the past five years, and 35.87% in the past month.
Over the past 52 weeks, IR shares have outperformed the market, rising 65.72%, compared to the 27.32% gain of the SPX in the same period. The shares are currently trading above the 50 DMA of $89.58 and 200 DMA of $73.78.
IR Analysts Outlook
Wall Street analysts are bullish on IR stock, giving it an overall strong buy rating. They forecast a broad target range, with a high of $112 and a low of $89. Their average price target is $101.50, which is a 9.80% upside based on the last closing price.
Is Ingersoll Rand A Buy?
Ingersoll Rand had a great financial performance in fiscal 2023, and it forecast the trend would continue in 2024. It has been on a buying spree as it seeks to expand its customer base. The recent upgrade by Moody’s allows it to access cheaper credit.
Additionally, it has a strong balance sheet, with access to $2.6 billion in liquidity, which is enough to support its ongoing expansion efforts. Considering that it has significantly outperformed the market in the past 52 weeks, it would be a great way to gain exposure to the Industrials sector.
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