Short Report on Trane Technologies Stock

Trane Technologies logged a -0.3% change during today's morning session, and is now trading at a price of $195.36 per share.

Trane Technologies returned gains of 40.0% last year, with its stock price reaching a high of $211.71 and a low of $139.49. Over the same period, the stock outperformed the S&P 500 index by 21.0%. More recently, the company's 50-day average price was $202.93. Trane Technologies plc, together with its subsidiaries, designs, manufactures, sells, and services of solutions for heating, ventilation, air conditioning, custom, and custom and transport refrigeration in Ireland and internationally. Based in Swords, Ireland, the large-cap Industrials company has 39,000 full time employees. Trane Technologies has offered a 1.4% dividend yield over the last 12 months.

Wider Gross Margins Than the Industry Average of 14.56%:

2018-02-12 2019-02-12 2020-02-18 2021-02-09 2022-02-07 2023-02-10
Revenue (MM) $14,198 $12,344 $13,076 $12,455 $14,136 $15,992
Gross Margins 31.0% 30.0% 31.0% 31.0% 32.0% 31.0%
Operating Margins 12% 12% 13% 12% 14% 15%
Net Margins 9.0% 11.0% 11.0% 7.0% 10.0% 11.0%
Net Income (MM) $1,303 $1,338 $1,411 $855 $1,423 $1,756
Net Interest Expense (MM) -$216 -$221 -$243 -$249 -$234 -$224
Depreciation & Amort. (MM) -$353 -$282 -$289 -$294 -$299 -$324
Earnings Per Share $5.05 $5.35 $5.77 $3.52 $5.89 $7.48
EPS Growth n/a 5.94% 7.85% -38.99% 67.33% 26.99%
Diluted Shares (MM) 258 250 244 243 242 235
Free Cash Flow (MM) $1,743 $1,683 $2,123 $1,581 $1,796 $1,786
Capital Expenditures (MM) -$220 -$275 -$203 -$146 -$208 -$282
Net Current Assets (MM) -$4,847 -$5,118 -$3,886 -$4,824 -$5,316 -$5,597
Long Term Debt (MM) $2,957 $3,741 $4,923 $4,496 $4,492 $3,788
Net Debt / EBITDA 1.25 1.78 2.19 1.08 1.16 1.32

Trane Technologies has strong margins with a stable trend and wider gross margins than its peer group. Additionally, the company's financial statements display positive EPS growth and healthy leverage. Furthermore, Trane Technologies has weak revenue growth and a flat capital expenditure trend, irregular cash flows, and just enough current assets to cover current liabilities.

Trane Technologies's Valuation Is in Line With Its Sector Averages:

Trane Technologies has a trailing twelve month P/E ratio of 24.7, compared to an average of 20.49 for the Industrials sector. Based on its EPS guidance of $9.75, the company has a forward P/E ratio of 20.8. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 6.8%. On this basis, the company's PEG ratio is 3.66, which suggests that it is overpriced. Furthermore, Trane Technologies is likely overvalued compared to the book value of its equity, since its P/B ratio of 7.13 is higher than the sector average of 3.78. The company's shares are currently trading 195.4% above their Graham number.

Trane Technologies Has an Analyst Consensus of Some Upside Potential:

The 17 analysts following Trane Technologies have set target prices ranging from $190.0 to $256.0 per share, for an average of $217.29 with a hold rating. As of April 2023, the company is trading -6.6% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Trane Technologies has a very low short interest because 0.8% of the company's shares are sold short. Institutions own 88.0% of the company's shares, and the insider ownership rate stands at 0.32%, suggesting a small amount of insider investors. The largest shareholder is Blackrock Inc., whose 9% stake in the company is worth $3,973,173,084.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.