Uncovering the Potential of Investing in TT – Analyst Insights

Trane Technologies logged a 7.5% change during today's morning session, and is now trading at a price of $323.53 per share.

Trane Technologies returned gains of 59.6% last year, with its stock price reaching a high of $326.97 and a low of $162.04. Over the same period, the stock outperformed the S&P 500 index by 35.4%. More recently, the company's 50-day average price was $292.23. 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 40,000 full time employees. Trane Technologies has offered a 1.0% dividend yield over the last 12 months.

Growing Revenues but an Average Current Ratio:

2018 2019 2020 2021 2022 2023
Revenue (M) $12,344 $13,076 $12,455 $14,136 $15,992 $17,678
Operating Margins 12% 13% 12% 14% 15% 16%
Net Margins 11% 11% 7% 10% 11% 11%
Net Income (M) $1,338 $1,411 $855 $1,423 $1,756 $2,024
Net Interest Expense (M) $221 $243 $249 $234 $224 $234
Depreciation & Amort. (M) $282 $289 $294 $299 $324 $348
Diluted Shares (M) 250 244 243 242 235 231
Earnings Per Share $5.35 $5.77 $3.52 $5.87 $7.48 $8.77
EPS Growth n/a 7.85% -38.99% 66.76% 27.43% 17.25%
Avg. Price $85.63 $109.99 $109.35 $173.01 $146.9 $323.97
P/E Ratio 15.83 18.83 30.72 29.03 19.46 36.61
Free Cash Flow (M) $1,123 $1,714 $1,289 $1,365 $1,212 $2,089
CAPEX (M) $285 $205 $146 $223 $292 $301
EV / EBITDA 13.91 16.12 15.78 19.07 14.21 24.27
Total Debt (M) $4,442 $6,224 $6,048 $5,192 $5,884 $5,582
Net Debt / EBITDA 1.99 2.52 1.51 1.31 1.7 1.38
Current Ratio 1.33 1.77 1.59 1.36 1.12 1.13

Trane Technologies benefits from growing revenues and increasing reinvestment in the business, strong operating margins with a positive growth rate, and generally positive cash flows. The company's financial statements show positive EPS growth and healthy leverage levels. Furthermore, Trane Technologies has just enough current assets to cover current liabilities, as shown by its current ratio of 1.13.

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

Trane Technologies has a trailing twelve month P/E ratio of 32.9, compared to an average of 22.19 for the Industrials sector. Based on its EPS guidance of $11.41, the company has a forward P/E ratio of 25.6. The 11.4% compound average growth rate of Trane Technologies's historical and projected earnings per share yields a PEG ratio of 2.88. This suggests that these shares are overvalued. Furthermore, Trane Technologies is likely overvalued compared to the book value of its equity, since its P/B ratio of 10.51 is higher than the sector average of 4.06. The company's shares are currently trading 318.3% below their Graham number. Ultimately, Trane Technologies's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.

Analysts Give Trane Technologies an Average Rating of Hold:

The 17 analysts following Trane Technologies have set target prices ranging from $270.31 to $355.0 per share, for an average of $305.31 with a hold rating. The company is trading 6.0% away from its average target price, indicating that there is an analyst consensus of little upside potential.

Trane Technologies has a very low short interest because 1.1% of the company's shares are sold short. Institutions own 87.7% of the company's shares, and the insider ownership rate stands at 0.3%, suggesting a small amount of insider investors. The largest shareholder is Blackrock Inc., whose 9% stake in the company is worth $6,388,095,106.

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.