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Industrial goods manufacturer Ingersoll-Rand Plc (IR - Free Report) reported strong first-quarter 2017 results with adjusted earnings per share (EPS) of 57 cents share compared with 50 cents in the year-earlier quarter. Adjusted earnings beat the Zacks Consensus Estimate of 53 cents.
Ingersoll-Rand PLC (Ireland) Price, Consensus and EPS Surprise
The GAAP earnings of the company were 47 cents per share compared with 48 cents in the year-ago period. The year-over-year decrease in GAAP earnings despite higher revenues was primarily attributable to higher operating expenses.
Quarterly revenues were $3,000.6 million, up from $2,894.1 million recorded in the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $2,917 million. Meanwhile, organic revenues improved 4% year over year. Organic revenues from North America and International markets increased 6% and 2%, respectively.
Segmental Performance
The climate segment recorded sales of $2,324.1 million compared with $2,213.5 million in the year-ago quarter. The upside was driven by solid revenues from commercial and residential HVAC (heating, ventilation and air conditioning) businesses.
The industrial segment posted revenues of $676.5 million in the reported quarter, down from $680.6 million in the prior-year quarter owing to decline in the material handling business.
Margins
Operating margin for the first quarter was 7.2% compared with 7.8% in the year-ago quarter. Adjusted operating margin improved to 8.3% from 8.1% in the prior-year quarter. Adjusted operating margin for the Climate segment was 10.6% compared with 9.9% in the year-ago quarter. Adjusted operating margin for the Industrial segment was 10.4%, up from 9.8% in the year-ago quarter.
Balance Sheet and Cash Flow
As of Mar 31, 2016, cash and cash equivalents totaled $1,322.5 million while long-term debt was $3,711.1 million. Net cash used in operating activities in the first quarter was $43.4 million compared with $7.6 million in the prior-year period. Working capital was 5.8% of revenues for 2017 compared with 6.2% in 2016, representing 40 basis points improvement.
Outlook
Ingersoll reaffirmed its guidance for 2017. It expects adjusted EPS from continuing operations to be in the range of $4.35 to $4.50 while revenues are expected to rise 2%. Cash flow from operating activities is expected to be $1.4–$1.5 billion while free cash flow is projected within $1.1–$1.2 billion.
Ingersoll currently carries a Zacks Rank #2 (Buy).
3M has a long-term earnings growth expectation of 9.7% and is currently trading at a forward P/E of 22.5x.
Crane Co. has a long-term earnings growth expectation of 10.10%.
Bunzl has a long-term earnings growth expectation of 7.5% and is currently trading at a forward P/E of 21.3x.
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Ingersoll (IR) Beats Q1 Earnings & Revenues, Reaffirms View
Industrial goods manufacturer Ingersoll-Rand Plc (IR - Free Report) reported strong first-quarter 2017 results with adjusted earnings per share (EPS) of 57 cents share compared with 50 cents in the year-earlier quarter. Adjusted earnings beat the Zacks Consensus Estimate of 53 cents.
Ingersoll-Rand PLC (Ireland) Price, Consensus and EPS Surprise
Ingersoll-Rand PLC (Ireland) Price, Consensus and EPS Surprise | Ingersoll-Rand PLC (Ireland) Quote
The GAAP earnings of the company were 47 cents per share compared with 48 cents in the year-ago period. The year-over-year decrease in GAAP earnings despite higher revenues was primarily attributable to higher operating expenses.
Quarterly revenues were $3,000.6 million, up from $2,894.1 million recorded in the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $2,917 million. Meanwhile, organic revenues improved 4% year over year. Organic revenues from North America and International markets increased 6% and 2%, respectively.
Segmental Performance
The climate segment recorded sales of $2,324.1 million compared with $2,213.5 million in the year-ago quarter. The upside was driven by solid revenues from commercial and residential HVAC (heating, ventilation and air conditioning) businesses.
The industrial segment posted revenues of $676.5 million in the reported quarter, down from $680.6 million in the prior-year quarter owing to decline in the material handling business.
Margins
Operating margin for the first quarter was 7.2% compared with 7.8% in the year-ago quarter. Adjusted operating margin improved to 8.3% from 8.1% in the prior-year quarter. Adjusted operating margin for the Climate segment was 10.6% compared with 9.9% in the year-ago quarter. Adjusted operating margin for the Industrial segment was 10.4%, up from 9.8% in the year-ago quarter.
Balance Sheet and Cash Flow
As of Mar 31, 2016, cash and cash equivalents totaled $1,322.5 million while long-term debt was $3,711.1 million. Net cash used in operating activities in the first quarter was $43.4 million compared with $7.6 million in the prior-year period. Working capital was 5.8% of revenues for 2017 compared with 6.2% in 2016, representing 40 basis points improvement.
Outlook
Ingersoll reaffirmed its guidance for 2017. It expects adjusted EPS from continuing operations to be in the range of $4.35 to $4.50 while revenues are expected to rise 2%. Cash flow from operating activities is expected to be $1.4–$1.5 billion while free cash flow is projected within $1.1–$1.2 billion.
Ingersoll currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other stocks worth considering in the industry include 3M Company (MMM - Free Report) , Crane Co. (CR - Free Report) and Bunzl plc (BZLFY - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3M has a long-term earnings growth expectation of 9.7% and is currently trading at a forward P/E of 22.5x.
Crane Co. has a long-term earnings growth expectation of 10.10%.
Bunzl has a long-term earnings growth expectation of 7.5% and is currently trading at a forward P/E of 21.3x.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
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