Ingersoll Rand shares fell by -1.1% during the day's morning session, and are now trading at a price of $89.47. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Ingersoll Rand's Valuation Is in Line With Its Sector Averages:
Ingersoll Rand Inc. provides various mission-critical air, gas, liquid, and solid flow creation technologies services and solutions worldwide. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 25.19 and an average price to book (P/B) ratio of 3.17. In contrast, Ingersoll Rand has a trailing 12 month P/E ratio of 44.3 and a P/B ratio of 3.63.
Ingersoll Rand's PEG ratio is 2.86, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Wider Gross Margins Than the Industry Average of 34.68%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $2,690 | $2,018 | $3,973 | $5,152 | $5,916 | $6,876 |
| Gross Margins | 38% | 39% | 35% | 39% | 39% | 42% |
| Net Margins | 10% | 8% | -1% | 11% | 10% | 11% |
| Net Income (M) | $269 | $159 | -$33 | $562 | $605 | $779 |
| Net Interest Expense (M) | $100 | $88 | $111 | $88 | $103 | $157 |
| Depreciation & Amort. (M) | $126 | $105 | $335 | $333 | $348 | $368 |
| Diluted Shares (M) | 209 | 209 | 383 | 421 | 410 | 409 |
| Earnings Per Share | $1.29 | $0.76 | -$0.09 | $1.34 | $1.47 | $1.9 |
| EPS Growth | n/a | -41.09% | -111.84% | 1588.89% | 9.7% | 29.25% |
| Free Cash Flow (M) | $392 | $305 | $872 | $564 | $771 | $1,272 |
| CAPEX (M) | $52 | $38 | $42 | $64 | $95 | $105 |
| Total Debt (M) | $3,328 | $3,208 | $7,718 | $3,441 | $2,753 | $2,724 |
| Net Debt / EBITDA | 5.46 | 9.03 | 15.12 | 1.48 | 0.98 | 0.74 |
| Current Ratio | 2.23 | 2.69 | 2.58 | 2.8 | 2.37 | 2.22 |
Ingersoll Rand benefits from rapidly growing revenues and increasing reinvestment in the business, generally positive cash flows, and an excellent current ratio of 2.22. The company's financial statements show wider gross margins than its peer group and positive EPS growth. However, the firm has a highly leveraged balance sheet.
