Ingersoll-Rand (IR) Stock Upgraded at Keybanc

NEW YORK (TheStreet) -- Keybanc upgraded Ingersoll-Rand (IR) to "overweight" from "sector weight" on Thursday.

The analyst firm set a price target of $80 for the diversified machinery company.

Keybanc analysts upgraded Ingersoll-Rand following the company's analyst day. The analysts see further runway on what was consistently strong execution at driving margin improvement and above-average growth, which they expect to continue.

"In addition, we like IR's end market exposures, in particular its leverage to sustained improvement in N.A. construction (reflective of our broader macro thesis), with minimal risk to oil & gas and slow international markets/FX headwinds," the analysts wrote. "Finally, we positively view the Company's straightforward approach to capital allocation, which includes a strong emphasis on returning cash to shareholders (through dividends and buyback), supplemented by logical bolt-on M&A (most recently FRIGOBLOCK, Cameron Centrifugal Compressor)."

Separately, TheStreet Ratings team rates INGERSOLL-RAND PLC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate INGERSOLL-RAND PLC (IR) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 10.5%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.79, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.74 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.
  • INGERSOLL-RAND PLC's earnings per share declined by 18.5% 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 increased its bottom line by earning $3.29 versus $2.08 in the prior year. This year, the market expects an improvement in earnings ($3.80 versus $3.29).
  • Net operating cash flow has remained constant at -$125.20 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -32.24%.
  • You can view the full analysis from the report here: IR Ratings Report

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