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Why Is Trane Technologies (TT) Up 8.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Trane Technologies (TT - Free Report) . Shares have added about 8.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Trane Technologies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Trane Technologies Q3 Earnings & Revenues Top Estimates
Adjusted EPS of $2.27 surpassed the Zacks Consensus Estimate by 7.1% and increased 26.1% year over year. Revenues of $4.4 billion beat the consensus mark by 5.1% and increased 18% year over year on a reported basis and 19% organically.
Strong results in the quarter were driven by robust demand. Bookings were up 6% year over year on a reported basis and 8% organically, to $4.5 billion.
Revenues and Bookings
The Americas segment’s revenues of $3.5 billion increased 20% year over year on a reported basis and 19% on an organic basis. Bookings increased 11% on a reported basis as well as organically, to $3.7 billion.
Europe, Middle East and Africa segment’s revenues came in at $513.1 million, up 4% year over year on a reported basis and 18% organically. Bookings were down 21% year over year on a reported basis and 10% organically, at 453.6 million.
Revenues from the Asia Pacific segment were up 20% year over year on a reported basis and 28% on an organic basis, to $377.4 million. Bookings of $358.8 million decreased 4% on a reported basis but increased 3% organically.
Margin Performance
Adjusted EBITDA came in at $809 million, up 21% year over year. Adjusted EBITDA margin improved 50 basis points (bps) to 18.5%. Adjusted operating income of $729 million increased 22% year over year, with the adjusted operating margin improving 60 bps to 16.7%.
Key Balance Sheet and Cash Flow Figures
Trane ended the quarter with a cash balance of $1.1 billion, flat with the previous quarter. Debt balance was $4.8 billion, flat with the previous quarter’s tally.
The company generated $515 million of cash from operating activities and a free cash flow of $504 million in the quarter.
Raised 2022 Guidance
Trane expects revenues to increase 11-12% on a reported basis and 13-14% on an organic basis compared with the prior expectation of an 11% increase on a reported basis and 12% on an organic basis.
Adjusted EPS is expected to be between $7.15 and $7.2 compared with the previously expected range of $7.05-$7.15.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Trane Technologies has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Trane Technologies has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Trane Technologies belongs to the Zacks Technology Services industry. Another stock from the same industry, IQVIA Holdings (IQV - Free Report) , has gained 8.2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
IQVIA reported revenues of $3.56 billion in the last reported quarter, representing a year-over-year change of +5%. EPS of $2.48 for the same period compares with $2.17 a year ago.
IQVIA is expected to post earnings of $2.76 per share for the current quarter, representing a year-over-year change of +8.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.
IQVIA has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Why Is Trane Technologies (TT) Up 8.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Trane Technologies (TT - Free Report) . Shares have added about 8.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Trane Technologies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Trane Technologies Q3 Earnings & Revenues Top Estimates
Trane Technologies reported better-than-expected third-quarter 2022 results.
Adjusted EPS of $2.27 surpassed the Zacks Consensus Estimate by 7.1% and increased 26.1% year over year. Revenues of $4.4 billion beat the consensus mark by 5.1% and increased 18% year over year on a reported basis and 19% organically.
Strong results in the quarter were driven by robust demand. Bookings were up 6% year over year on a reported basis and 8% organically, to $4.5 billion.
Revenues and Bookings
The Americas segment’s revenues of $3.5 billion increased 20% year over year on a reported basis and 19% on an organic basis. Bookings increased 11% on a reported basis as well as organically, to $3.7 billion.
Europe, Middle East and Africa segment’s revenues came in at $513.1 million, up 4% year over year on a reported basis and 18% organically. Bookings were down 21% year over year on a reported basis and 10% organically, at 453.6 million.
Revenues from the Asia Pacific segment were up 20% year over year on a reported basis and 28% on an organic basis, to $377.4 million. Bookings of $358.8 million decreased 4% on a reported basis but increased 3% organically.
Margin Performance
Adjusted EBITDA came in at $809 million, up 21% year over year. Adjusted EBITDA margin improved 50 basis points (bps) to 18.5%. Adjusted operating income of $729 million increased 22% year over year, with the adjusted operating margin improving 60 bps to 16.7%.
Key Balance Sheet and Cash Flow Figures
Trane ended the quarter with a cash balance of $1.1 billion, flat with the previous quarter. Debt balance was $4.8 billion, flat with the previous quarter’s tally.
The company generated $515 million of cash from operating activities and a free cash flow of $504 million in the quarter.
Raised 2022 Guidance
Trane expects revenues to increase 11-12% on a reported basis and 13-14% on an organic basis compared with the prior expectation of an 11% increase on a reported basis and 12% on an organic basis.
Adjusted EPS is expected to be between $7.15 and $7.2 compared with the previously expected range of $7.05-$7.15.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Trane Technologies has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Trane Technologies has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Trane Technologies belongs to the Zacks Technology Services industry. Another stock from the same industry, IQVIA Holdings (IQV - Free Report) , has gained 8.2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
IQVIA reported revenues of $3.56 billion in the last reported quarter, representing a year-over-year change of +5%. EPS of $2.48 for the same period compares with $2.17 a year ago.
IQVIA is expected to post earnings of $2.76 per share for the current quarter, representing a year-over-year change of +8.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.
IQVIA has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.