Ingersoll-Rand Upgraded to Buy

Zacks

Zacks Investment Research upgraded Ingersoll-Rand Plc (IR) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold) on Jul 11, 2014, on account of upward estimate revisions in response to healthy guidance by the company for the coming quarters.

Why the Upgrade?    

The industrial goods manufacturer reported adjusted first-quarter earnings of 29 cents per share, comfortably beating the Zacks Consensus Estimate of 25 cents. Ingersoll also recorded robust revenues, in spite of harsh winter conditions and slack industrial markets. Furthermore, the company’s guidance for the coming quarters boosted investors’ confidence.

In spite of moderate growth conditions in the construction and industrial markets, the company expects healthy revenue growth of 4–5% for the second quarter. Ingersoll projects adjusted earnings per share (EPS) for the quarter to lie in the range of $1.09 to $1.13, reflecting strong sequential growth.

The company, boasting a solid balance sheet, has consistently returned significant cash to its shareholders through share repurchase and dividends over the last three years. Ingersoll has recently been undergoing restructuring and streamlining operations to reduce costs and boost profitability.

Part of its strategy has been to divest underperforming businesses and focus on high-growth operations. The company spun off its commercial and residential security business, Allegion plc (ALLE) in Dec 2013, intending to focus on its industrial, refrigeration and heating, and ventilation and air-conditioning (:HVAC) businesses. The company is expected to build upon its healthy order book as industrial markets pick up pace, with climate orders offering strong potential in the coming quarters.

Ingersoll has seen the Zacks Consensus Estimate for the current year move up by 2 cents to $3.19 over the past one month. It has witnessed upward estimate revisions for 2015 also, which helped the Zacks Consensus Estimate to rise from $3.81 to $3.84 over the past few weeks.

Other Stocks to Consider

Other stocks in the industry that are worth a mention include Blount International Inc. (BLT) and EnPro Industries, Inc. (NPO), both sporting a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on IR
Read the Full Research Report on NPO
Read the Full Research Report on BLT
Read the Full Research Report on ALLE


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