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Here's Why Trane Technologies Stock is a Great Pick for You
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Trane Technologies (TT - Free Report) has performed well over the past year and has the potential to sustain momentum in the near term. Hence, if you have not taken advantage of the share price appreciation yet, it is time for you to add the stock to your portfolio.
What Makes TT an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run over the year. Shares of Trane Technologies have surged 67.9% compared with the 45.3% rally of the industry it belongs to and the 24.5% rise of the Zacks S&P 500 composite.
One Year Price Performance
Image Source: Zacks Investment Research
Solid Rank: Trane Technologies, which is a building technology and energy solutions provider,currentlyhas a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
Northward Estimate Revisions: Seven estimates for 2024 moved north in the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for 2024 earnings has moved up 3.3% in the past 60 days.
Positive Earnings Surprise History: TT has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering an earnings surprise of 8.1% on average.
Strong Growth Prospects: The Zacks Consensus Estimate for Trane Technologies’ 2024 revenues is pegged at $19.5 billion, indicating 10.6% year-over-year growth.
The Zacks Consensus Estimate for 2024 earnings per share is pegged at $10.8 billion, suggesting a 19.8% year-over-year rise.
Growth Factors: In the second quarter of 2024, TT recorded a backlog of $7.5 billion, increasing 19% on an organic basis from the preceding quarter. Such a strong backlog will support Trane Technologies' growth through 2024 and 2025.
TT is the leading applied solution provider and it is driving significant market growth in the most appealing high-growth verticals in the commercial Heating, Ventilation, and Air Conditioning (HVAC) industry. Second-quarter 2024 revenues for applied solutions in the Americas have risen almost 90% over the past three years. Trane Technologies anticipates its applied systems to carry an 8-10X higher margin of service revenues over the life of the equipment.
The company has introduced a residential HVAC and heat pump portfolio, which offers better energy efficiencies. These new products are anticipated to drive the demand for the replacement and provide a higher gross margin. Also, we expect the Fed's potential interest rate reduction in September 2024 to benefit TT. A sustained interest rate cut through 2024 and 2025 will help the housing market to recover, stimulating the demand for the residential HVAC and heat pump market.
Image: Bigstock
Here's Why Trane Technologies Stock is a Great Pick for You
Trane Technologies (TT - Free Report) has performed well over the past year and has the potential to sustain momentum in the near term. Hence, if you have not taken advantage of the share price appreciation yet, it is time for you to add the stock to your portfolio.
What Makes TT an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run over the year. Shares of Trane Technologies have surged 67.9% compared with the 45.3% rally of the industry it belongs to and the 24.5% rise of the Zacks S&P 500 composite.
One Year Price Performance
Solid Rank: Trane Technologies, which is a building technology and energy solutions provider,currentlyhas a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: Seven estimates for 2024 moved north in the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for 2024 earnings has moved up 3.3% in the past 60 days.
Positive Earnings Surprise History: TT has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering an earnings surprise of 8.1% on average.
Strong Growth Prospects: The Zacks Consensus Estimate for Trane Technologies’ 2024 revenues is pegged at $19.5 billion, indicating 10.6% year-over-year growth.
The Zacks Consensus Estimate for 2024 earnings per share is pegged at $10.8 billion, suggesting a 19.8% year-over-year rise.
Growth Factors: In the second quarter of 2024, TT recorded a backlog of $7.5 billion, increasing 19% on an organic basis from the preceding quarter. Such a strong backlog will support Trane Technologies' growth through 2024 and 2025.
TT is the leading applied solution provider and it is driving significant market growth in the most appealing high-growth verticals in the commercial Heating, Ventilation, and Air Conditioning (HVAC) industry. Second-quarter 2024 revenues for applied solutions in the Americas have risen almost 90% over the past three years. Trane Technologies anticipates its applied systems to carry an 8-10X higher margin of service revenues over the life of the equipment.
The company has introduced a residential HVAC and heat pump portfolio, which offers better energy efficiencies. These new products are anticipated to drive the demand for the replacement and provide a higher gross margin. Also, we expect the Fed's potential interest rate reduction in September 2024 to benefit TT. A sustained interest rate cut through 2024 and 2025 will help the housing market to recover, stimulating the demand for the residential HVAC and heat pump market.
Zacks Rank & Other Stocks to Consider
Some other top-ranked stocks in the broader Zacks Business Services sector are Docusign (DOCU - Free Report) and UL Solutions Inc. (ULS - Free Report) .
Docusign flaunts a Zacks Rank of 1 (Strong Buy) at present.
DOCU has a long-term earnings growth anticipation of 9.3%. It has delivered a trailing four-quarter earnings surprise of 18.3%, on average.
UL Solutions sports a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 7.6%.
ULS delivered a trailing four-quarter earnings surprise of 7.9%, on average.