Ingersoll-Rand PLC Stock Buy Recommendation Reiterated (IR)

NEW YORK (TheStreet) -- Ingersoll-Rand (NYSE:IR) has been reiterated by TheStreet Ratings as a buy with a ratings score of B+ . The company's strengths can be seen in multiple areas, such as its compelling growth in net income, impressive record of earnings per share growth and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

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Highlights from the ratings report include:

• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 296.3% when compared to the same quarter one year prior, rising from $92.30 million to $365.80 million.
• INGERSOLL-RAND PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INGERSOLL-RAND PLC reported lower earnings of $1.21 versus $2.24 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $1.21).
• IR, with its decline in revenue, underperformed when compared the industry average of 9.4%. Since the same quarter one year prior, revenues slightly dropped by 6.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
• After a year of stock price fluctuations, the net result is that IR's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
• The gross profit margin for INGERSOLL-RAND PLC is currently lower than what is desirable, coming in at 30.80%. Regardless of IR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.60% trails the industry average.

Ingersoll-Rand Public Limited Company engages in the design, manufacture, sale, and service of a diverse portfolio of industrial and commercial products in the United States and internationally. The company has a P/E ratio of 28.7, above the average industrial industry P/E ratio of 16.2and above the S&P 500 P/E ratio of 17.7. Ingersoll-Rand has a market cap of $11.81 billion and is part of the industrial goods sector and industrial industry. Shares are up 31.3% year to date as of the close of trading on Thursday.

You can view the full Ingersoll-Rand Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

 

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