Ingersoll-Rand PLC Stock Buy Recommendation Reiterated (IR)

Editor's Note: 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.

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 solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:
  • INGERSOLL-RAND PLC reported flat earnings per share in the most recent quarter. 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 increased its bottom line by earning $3.29 versus $1.21 in the prior year. This year, the market expects an improvement in earnings ($3.60 versus $3.29).
  • Compared to its closing price of one year ago, IR's share price has jumped by 30.54%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.73 is somewhat weak and could be cause for future problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Machinery industry and the overall market on the basis of return on equity, INGERSOLL-RAND PLC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Despite the weak revenue results, IR has outperformed against the industry average of 21.9%. Since the same quarter one year prior, revenues slightly dropped by 1.2%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

Ingersoll-Rand plc engages in the design, manufacture, sale, and service of a diverse portfolio of industrial and commercial products in the United States and internationally. Ingersoll-Rand has a market cap of $15.6 billion and is part of the industrial goods sector and industrial industry. The company has a P/E ratio of 16.00, below the S&P 500 P/E ratio of 18.00. Shares are up 9.4% 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.

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