Ingersoll Promoted to Hold - Analyst Blog
January 13 2014 - 4:45PM
Zacks
On Jan 11, Zacks Investment
Research upgraded industrial goods manufacturer
Ingersoll-Rand Plc (IR) to a Zacks Rank #3 (Hold)
largely on the back of strong long-term fundamentals.
Ingersoll’s share price has steadily been on an uptrend since
mid-2013. The stock hit a 52-week high of $62.89 on Jan 10, 2014,
before closing the trading session a notch lower at $62.65 for a
healthy year-over-year return of 57.7%. Despite its strong price
appreciation, Ingersoll still has the wherewithal for the stock to
climb up. The stock is currently trading at a forward P/E of 19.3x
and has long-term earnings growth expectation of 15.0%.
Why the Upgrade?
On Dec 2, Ingersoll completed the spin-off of its commercial and
residential security businesses into a separate standalone company.
Ingersoll will not have any stake in this new company, which has
been listed on New York Stock Exchange as Allegion
plc (ALLE). Ingersoll shareholders received one Allegion
share for every three Ingersoll shares held at the close of
business as of the record date of Nov 22, 2013.
The spin-off is expected to unlock value for the company’s
shareholders. With the spin-off, Ingersoll will be able to
strengthen its focus on core businesses. The restructuring
initiative is aimed at driving its growth initiative, implementing
a new business operating system and reducing complexity and
overhead cost to improve margins.
On Oct 18, the company delivered solid third-quarter 2013 results
beating the Zacks Consensus Estimate on both revenues and earnings.
Adjusted earnings stood at $1.16, beating the Zacks Consensus
Estimate by 7.4%. Quarterly revenues of $3,749 million beat the
Zacks Consensus Estimate of $3,727 million and rose 4% year over
year. All the four segments of the company reported year-over-year
growth in revenues.
Over the last 7 days, the earnings estimates for Ingersoll did not
show any upward or downward revision for 2013 and 2014. Despite the
lack of estimate revisions, we anticipate an uptrend for the stock
backed by its strong growth potential.
Other Stocks to Consider
Players in the industry worth reckoning include Altra
Industrial Motion Corp. (AIMC) and Graco
Inc. (GGG), each carrying a Zacks Rank #2 (Buy).
ALTRA HOLDINGS (AIMC): Free Stock Analysis Report
GRACO INC (GGG): Free Stock Analysis Report
INGERSOLL RAND (IR): Free Stock Analysis Report
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