Ingersoll Rand
IR
$77.46
-4.59%
Ingersoll Rand Inc. is a diversified industrial company operating in the Industrial - Machinery sector, with a portfolio focused on compression, blower and vacuum, and fluid management technologies. The company is a significant player formed through the merger of Gardner Denver and Ingersoll Rand's industrial segment, serving a variety of end markets including industrial, medical, and energy through its two main business lines: Industrial Technologies and Services, and Precision and Science Technologies. The current investor narrative centers on the company's ability to navigate a mixed industrial demand environment, with recent financials showing solid revenue growth but also significant quarterly volatility in profitability, as evidenced by a sharp swing from a net loss in Q2 2025 to strong net income in Q4 2025, driving debate about the sustainability of its margin expansion and cash flow generation.…
IR
Ingersoll Rand
$77.46
Investment Opinion: Should I buy IR Today?
Rating & Thesis: Hold. Ingersoll Rand presents a conflicted profile of strong financials offset by volatile operations, making it unsuitable for a clear Buy or Sell recommendation at the current price. The analyst community reflects this with a mix of Overweight/Buy and Hold ratings, and the stock's current price is in a consolidation phase without a clear catalyst for a breakout.
Supporting Evidence: The recommendation is supported by four key data points: 1) The reasonable forward P/E of 21.65x, which prices in expected EPS growth to $4.52, 2) Strong TTM free cash flow of $1.22 billion enabling shareholder returns, 3) A healthy balance sheet with a debt-to-equity of 0.47, and 4) Positive revenue growth of 10.14% YoY in the latest quarter. However, these are counterbalanced by an elevated trailing P/E of 54.24x and a premium PS ratio of 4.12x versus peers.
Risks & Conditions: The two biggest risks are the unsustainable volatility in quarterly earnings and the premium sales valuation demanding perfect execution. This Hold would upgrade to a Buy if the company demonstrates two consecutive quarters of stable, high-single-digit net margins and the stock price declines to the $75-$78 range (closer to its 52-week low), offering a better margin of safety. It would downgrade to a Sell if revenue growth decelerates below 5% YoY or if gross margins fail to recover above 30% consistently. The stock is currently fairly valued to slightly overvalued relative to its own history and sector peers, requiring proof of sustained earnings power to justify its price.
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IR 12-Month Price Forecast
The 12-month outlook for IR is one of cautious consolidation. The company's strong cash generation and balance sheet provide a solid floor, but its erratic profitability and premium sales valuation cap significant upside in the absence of proof of sustained execution. The base case of range-bound trading around the mid-$80s to low-$90s is most probable, as the market requires several quarters of stability to gain conviction. The stance would upgrade to bullish on evidence of margin stabilization (gross margin >35% for two quarters) and a breakout above $100 on strong volume. It would turn bearish if the stock breaks below $72.45 support on an earnings miss.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Ingersoll Rand's 12-month outlook, with a consensus price target around $100.70 and implied upside of +30.0% versus the current price.
Average Target
$100.70
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$62 - $101
Analyst target range
Analyst coverage for Ingersoll Rand is limited, with only 5 analysts providing estimates, indicating it is a mid-cap stock with moderate institutional following. The consensus sentiment appears cautiously optimistic, with recent institutional ratings including actions like 'Overweight' from Wells Fargo and Barclays and a 'Buy' from Citigroup, balanced by 'Hold' ratings from Stifel. The average target price is not explicitly provided in the data, but analyst estimates point to an average EPS of $4.52 and average revenue of $9.20 billion for the coming year. The target price range is implied by the EPS estimates, with a low EPS estimate of $4.46 and a high of $4.60. The relatively tight range between the low and high EPS estimates signals a fair degree of consensus among the covering analysts regarding the company's near-term earnings power. The pattern of recent ratings shows stability, with most firms reaffirming their existing ratings (e.g., Stifel maintaining 'Hold', Wells Fargo maintaining 'Overweight') following earnings reports, suggesting analysts' views are not undergoing major shifts. The limited number of covering analysts can lead to higher stock price volatility due to less efficient price discovery, but the stability in recent ratings points to a settled, if not exuberant, analyst view.
Bulls vs Bears: IR Investment Factors
The investment debate for Ingersoll Rand is finely balanced between strong underlying financial health and concerning operational volatility. The bull case is anchored by robust free cash flow, a solid growth trajectory, and a reasonable forward valuation, all supported by a fortress balance sheet. The bear case highlights severe quarterly swings in profitability and margins, a premium sales-based valuation, and recent technical weakness. Currently, the bearish evidence on earnings volatility and valuation premium carries slightly more weight, as it directly challenges the core investment thesis of a predictable, high-quality industrial grower. The single most important tension is the sustainability of margin expansion and earnings quality; resolution of the extreme quarterly swings in net income and gross margin will determine whether the stock can re-rate towards its forward multiple or de-rate further on valuation concerns.
Bullish
- Strong Free Cash Flow Generation: The company generates robust free cash flow, with TTM FCF of $1.22 billion. This provides significant financial flexibility for reinvestment, debt reduction, and shareholder returns, supporting a healthy balance sheet with a low debt-to-equity ratio of 0.47.
- Solid Revenue Growth Trajectory: Q4 2025 revenue grew 10.14% YoY to $2.09 billion, continuing a multi-quarter uptrend from $1.68 billion in Q1 2025. This demonstrates resilience and growth in a mixed industrial demand environment, with the Industrial Technologies segment driving the majority of sales.
- Attractive Forward Valuation: The forward P/E of 21.65x is reasonable for a growing industrial company, especially when compared to the elevated trailing P/E of 54.24x. This forward multiple implies the market expects earnings to normalize and grow, supported by analyst consensus EPS of $4.52 for the coming year.
- Healthy Balance Sheet & Liquidity: A current ratio of 2.06 and a debt-to-equity ratio of 0.47 indicate a strong, conservative financial position. This low leverage provides a buffer against economic downturns and capacity for strategic acquisitions or share buybacks.
Bearish
- Extreme Profitability Volatility: Net income swung wildly from a loss of -$115.3M in Q2 2025 to a profit of $266.1M in Q4 2025, with gross margin collapsing from 44.6% to 24.1% over the same period. This volatility raises serious questions about earnings quality, cost control, and the sustainability of margins.
- Premium Valuation on Sales Metrics: The Price-to-Sales ratio of 4.12x and EV/Sales of 4.86x are significantly above typical industrial machinery peers (1.5x-3x range). This premium demands flawless execution and sustained high growth, leaving little room for operational missteps.
- Weak Recent Momentum & Underperformance: The stock is down -3.90% over the past 3 months and has underperformed the SPY by -8.51% over the past month. This loss of momentum, with a beta of 1.33 indicating higher volatility, suggests investor skepticism about near-term catalysts and growth sustainability.
- Elevated Trailing P/E Ratio: A trailing P/E of 54.24x is near the top of the stock's historical range and is extremely high for an industrial company. This reflects past earnings weakness and places immense pressure on the company to deliver on forward EPS estimates of $4.52 to justify the valuation.
IR Technical Analysis
The stock is in a volatile, range-bound consolidation phase after a significant rally earlier in the year. The 1-year price change of +10.65% indicates a positive longer-term trend, but the current price of $83.81 sits at approximately 38% of its 52-week range (from $72.45 to $100.96), suggesting it is trading closer to the lower end of its annual band, which may present a value opportunity but also reflects recent weakness and a failure to hold near highs. Recent momentum has been weak and diverges from the positive 1-year trend, with the stock down -3.90% over the past 3 months and up a modest +0.19% over the past month, indicating a loss of upward momentum and potential consolidation or distribution after the earlier advance. Key technical support is anchored at the 52-week low of $72.45, while immediate overhead resistance is at the recent high and 52-week high area near $100.96. A decisive break above the $100 level would signal a resumption of the primary uptrend, while a breakdown below the $72.45 support would indicate a more severe bearish trend reversal. The stock's beta of 1.333 indicates it is approximately 33% more volatile than the broader market (SPY), which is important for risk-aware investors as it suggests the stock will typically experience larger swings, both up and down, relative to market moves. The price action shows a clear peak in February 2026 near $100, followed by a sharp correction into March, finding a trough near $76.94 before a partial recovery. The stock's relative strength has been weak, with a 1-month relative strength of -8.51% versus the SPY, indicating significant underperformance in the short term. Volume data shows an average of 4.51 million shares traded, and the short ratio of 5.33 suggests a moderately elevated level of short interest, which could fuel a short-covering rally if positive catalysts emerge.
Beta
1.33
1.33x market volatility
Max Drawdown
-22.1%
Largest decline past year
52-Week Range
$72-$101
Price range past year
Annual Return
+3.5%
Cumulative gain past year
| Period | IR Return | S&P 500 |
|---|---|---|
| 1m | +0.7% | +12.6% |
| 3m | -12.8% | +2.5% |
| 6m | +1.5% | +4.3% |
| 1y | +3.5% | +28.4% |
| ytd | -2.9% | +4.3% |
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IR Fundamental Analysis
Revenue growth has been positive but shows some quarterly volatility. The most recent quarterly revenue (Q4 2025) was $2.09 billion, representing a year-over-year growth rate of 10.14%. Segment data reveals the Industrial Technologies and Services segment is the primary driver, contributing $1.67 billion in the latest period, while the Precision and Science Technologies segment contributed $419 million. The multi-quarter trend indicates revenue has grown from $1.68 billion in Q1 2025 to $2.09 billion in Q4 2025, suggesting a generally positive trajectory, though growth decelerated from the high-teens pace seen in earlier 2025 comparisons. Profitability is solid but has experienced significant quarterly swings. Net income for Q4 2025 was a strong $266.1 million, translating to a net margin of 12.7%, a marked recovery from a net loss of -$115.3 million in Q2 2025. The gross margin for Q4 2025 was 24.06%, which appears compressed compared to the 44.6% gross margin reported in Q1 2025; this volatility in margins requires scrutiny into one-time items or segment mix changes. The company's trailing twelve-month net margin stands at 7.6%, and its operating margin is 18.5%, indicating generally healthy underlying profitability for an industrial machinery company. The balance sheet is healthy with a strong liquidity position. The current ratio is a robust 2.06, and the debt-to-equity ratio is a conservative 0.47, indicating a balanced capital structure with moderate financial leverage. Free cash flow generation is strong, with TTM free cash flow of $1.22 billion, providing ample internal funding for growth initiatives, dividends, and share repurchases. Return on equity (ROE) is 5.76%, which is modest but improved from recent quarters, suggesting the company is generating acceptable returns on shareholder capital.
Quarterly Revenue
$2.1B
2025-12
Revenue YoY Growth
+0.10%
YoY Comparison
Gross Margin
+0.24%
Latest Quarter
Free Cash Flow
$1.2B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is IR Overvalued?
Given the company's positive net income, the primary valuation metric selected is the Price-to-Earnings (PE) ratio. The trailing PE ratio is elevated at 54.24x, while the forward PE is significantly lower at 21.65x. This substantial gap implies the market is pricing in a strong recovery and growth in earnings over the next twelve months, aligning with analyst EPS estimates of $4.52 for the coming year versus the most recent quarterly EPS of $0.68. Compared to sector averages, Ingersoll Rand trades at a premium on a sales basis. Its Price-to-Sales (PS) ratio of 4.12x and EV-to-Sales of 4.86x are above typical industrial machinery peers, which often trade in the 1.5x-3x sales range. This premium is likely justified by the company's above-average operating margin of 18.5% and its strategic positioning in higher-margin industrial technology segments, though it demands superior execution to maintain. Historically, the stock's current trailing PE of 54.24x is near the top of its own historical range observed over the past several years, where PE ratios have typically fluctuated between the 20s and 40s. This suggests the market is currently pricing in very optimistic expectations for future earnings growth and margin expansion. The current PS ratio of 4.12x is also above its historical median, indicating the stock is not in a value territory based on its own history and requires the company to deliver on its growth projections to sustain these levels.
PE
54.2x
Latest Quarter
vs. Historical
High-End
5-Year PE Range -72x~49x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
18.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: The primary risk is the extreme volatility in quarterly profitability, as evidenced by the swing from a -$115.3M net loss in Q2 2025 to a $266.1M profit in Q4 2025, alongside a gross margin compression from 44.6% to 24.1%. This erratic performance suggests potential one-time charges, segment mix issues, or poor cost control, making future earnings difficult to forecast. While the balance sheet is strong (D/E 0.47), the company's premium valuation (PS 4.12x) is entirely dependent on delivering sustained high-margin growth; any deceleration could trigger multiple compression.
Market & Competitive Risks: The stock trades at a significant premium on sales multiples (PS 4.12x) compared to typical industrial machinery peers, creating substantial valuation compression risk if growth expectations are not met. Its high beta of 1.333 means it is 33% more volatile than the market, amplifying downside during broader market sell-offs. The stock has already shown significant underperformance versus the SPY over the past month (-8.51% relative strength), indicating sensitivity to sector rotation out of industrials or growth concerns.
Worst-Case Scenario: The worst-case scenario involves a failure to stabilize margins, leading to an earnings miss that shatters confidence in the forward P/E narrative. This could be compounded by a broader industrial slowdown, triggering analyst downgrades. A realistic downside could see the stock re-testing its 52-week low of $72.45, representing a potential loss of approximately -13.6% from the current price of $83.81. A more severe scenario, incorporating the stock's high beta and historical max drawdown of -22.09%, could see a decline towards the $65-$70 range, implying a loss of -17% to -22%.
FAQ
The key risks are, in order of severity: 1) Operational Risk: Extreme volatility in quarterly profitability and margins, as seen in the swing from a Q2 2025 net loss to a Q4 2025 profit. 2) Valuation Risk: Trading at a premium PS ratio of 4.12x, creating high vulnerability to multiple compression if growth slows. 3) Market Risk: A high beta of 1.33 means the stock will likely fall more than the market during downturns, evidenced by recent underperformance. 4) Coverage Risk: Limited analyst coverage (5 analysts) can lead to less efficient price discovery and higher volatility.
The 12-month forecast is for range-bound consolidation with a base case target of $85-$95 (60% probability), predicated on the company meeting analyst EPS estimates of ~$4.52 but failing to achieve a valuation re-rating due to ongoing volatility. A bullish case to $100-$110 (25% probability) requires margin stabilization and a breakout above technical resistance. A bearish case to $72-$78 (15% probability) would be triggered by an earnings miss and a break below key support. The most likely scenario is the base case, as the market awaits proof of consistent execution.
IR sends mixed valuation signals. It appears significantly overvalued based on its trailing P/E of 54.24x and Price-to-Sales ratio of 4.12x, which is well above typical industrial peers. However, it looks more reasonably valued on a forward basis, with a P/E of 21.65x based on expected EPS growth to $4.52. The market is currently paying a premium price for sales, implying high expectations for future margin expansion and earnings growth. Until those expectations are met with consistent results, the stock is fairly valued to slightly overvalued.
IR is a conditional buy, not a clear-cut opportunity. For investors with a medium-term horizon and tolerance for volatility, the current price near the lower end of its 52-week range and a forward P/E of 21.65x could be attractive, especially given its strong free cash flow ($1.22B TTM) and solid balance sheet. However, the extreme quarterly earnings volatility and premium sales valuation (PS 4.12x) make it a higher-risk proposition. It is a better buy on a pullback towards $78 for those who believe the company can stabilize its profitability.
IR is more suitable for a medium-to-long-term investment horizon of 2-3 years. Its high beta (1.33) and earnings volatility make it a poor candidate for short-term trading, as price swings can be sharp and unpredictable. A longer horizon allows time for the company to potentially demonstrate more consistent execution and for the forward earnings story to play out. The stock does not pay a meaningful dividend (yield 0.1%), so it is not an income investment. Patient investors seeking capital appreciation from a cash-generative industrial business may find it appropriate for a long-term growth-oriented portfolio sleeve.
