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Ingersoll Rand (IR) Exhibits Strong Prospects, Endures Risks

·3 min read

Ingersoll Rand Inc. IR is poised to gain from strength across its diverse end markets, including mining & construction, industrial manufacturing, energy, transportation, medical and laboratory sciences, and others in the quarters ahead. Also, strength in IR’s medical, food and pharma businesses along with its , solid product portfolio, innovation capabilities and a focus on boosting aftermarket businesses are likely to drive its performance over time.

IR intends to strengthen and expand its businesses through acquisitions. Ingersol Rand inked a deal to acquire Holtec Gas Systems LLC (Holtec), Shanghai Hanye Air Purifying Technology Co., Ltd (Hanye) and Hydro Prokav Pumps (India) Private Limited (Hydro Prokav) in August 2022. The buyout of Holtec and Hanye will likely expand Ingersoll Rand’s air-treatment capabilities. Also, the takeover of Hydro Prokav will likely enhance IR’s presence in the progressive cavity pumps market. Its acquisition of Houdstermaatschappij Jorc (February 2022) expanded its Industrial Technologies & Services segment’s product offerings. The December 2021 purchase of Tuthill Pump Group strengthened Ingersoll Rand’s existing pumping solution offerings.

Ingersoll Rand focuses on rewarding its shareholders through dividend payments and share repurchases. In the first six months of 2022, IR paid out dividends of $16.2 million and bought back shares worth $253.7 million.

However, supply-chain and cost woes pose a challenge to Ingersoll Rand. In second-quarter 2022, IR’s costs of sales increased 13.5% year over year, while its selling and administrative expenses grew 3.1%. If not checked, these escalating costs might impact its margin performance.

IR’s global presence exposes it to various environmental laws and regulations in the countries where it operates. Also, the entity remains vulnerable to foreign-currency and geopolitical issues. Forex woes hampered sales 5.4% year over year in the second quarter. In the quarters ahead, IR's overseas business might be depressed by a stronger U.S. dollar.

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Zacks Investment Research

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In the past six months, this currently Zacks Rank #3 (Hold) stock has gained 0.3% against the industry’s decline of 4.5%.

Stocks to Consider

Some better-ranked companies from the industrial products sector are discussed below:

Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank #1 (Strong Buy). AIT delivered a trailing four-quarter earnings surprise of 22.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

AIT’s earnings estimates have increased 5.8% for fiscal 2023 (ending June 2023) in the past 60 days. Its shares have rallied 5.2% in the past six months.

Greif, Inc. GEF presently has a Zacks Rank #2 (Buy). GEF delivered a trailing four-quarter earnings surprise of 22.4%, on average.

GEF’s earnings estimates have increased 4.6% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 22.1% in the past six months.

Valmont Industries, Inc. VMI presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 13.7%, on average.

In the past 60 days, Valmont’s earnings estimates have increased 3.8% for 2022. The stock has rallied 26.3% in the past six months.

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