Ingersoll Rand Inc.'s (NYSE:IR) Fundamentals: A Closer Look at Its Recent Weakness

Ingersoll Rand Inc. (NYSE:IR) has experienced a recent decline in its stock price, with a 12.24% decrease in the last month and an 11.44% decrease in the last three months. This article aims to analyze the company's fundamentals and determine if its recent weakness warrants a buying opportunity.



Financial Performance and Growth

Ingersoll Rand's revenue grew by 7.06% in the III. Quarter 2024 compared to the same quarter a year ago. The company's net income also grew by 6.58% in the same period. These growth figures indicate that Ingersoll Rand is expanding its business and generating more profits. Additionally, the company's operating margin improved from 15.06% in the II. Quarter 2024 to 19.15% in the III. Quarter 2024, demonstrating enhanced operational efficiency.



Profitability and Valuation

Ingersoll Rand's net profit margin of 12% ranks it at number 21 in the Industrial Machinery and Components industry, number 60 in the Capital Goods sector, and number 1140 in the S&P 500. This relatively high profit margin suggests that the company is generating a significant amount of profit from its revenue. However, Ingersoll Rand's trailing PE ratio is 42.45, which is higher than the industry average of 22.4x. This indicates that the company's stock price may be overvalued compared to its peers.

Analyst Ratings and Price Targets

According to 17 analysts, the average rating for IR stock is "Buy," and the 12-month stock price forecast is $106.30, which is an increase of 21.8% from the latest price. These positive analyst ratings and price targets suggest that Ingersoll Rand has the potential for further growth and recovery.

Debt-to-Equity Ratio and Financial Health

Ingersoll Rand's debt-to-equity ratio is 0.47, which is lower than the average of its peers in the Industrial Machinery and Components industry. This indicates that Ingersoll Rand has a lower level of debt relative to its equity compared to its competitors. A lower debt-to-equity ratio suggests better financial health, as the company is less reliant on debt financing and has more equity capital to absorb potential losses.



Conclusion

Ingersoll Rand's recent stock weakness can be attributed to market conditions, earnings misses, debt concerns, and acquisition costs. However, the company's strong financial performance, growth, and profitability, along with positive analyst ratings and a low debt-to-equity ratio, suggest that its fundamentals are solid. While the company's trailing PE ratio may indicate overvaluation, investors should consider the potential for future growth and the company's strong financial health. As the market conditions improve and Ingersoll Rand continues to execute on its strategic initiatives, its stock price may recover, making it an attractive investment opportunity.