Ingersol Rand manufactures, markets and services various equipment for a variety of applications.
The firm has three main divisions: the Industrials Group, the Energy Group and the Medical Group. The Industrials Group focuses on products for primarily industrial manufacturing, transportation, mining and construction. The Energy Group manufactures systems for power generation and environmental applications. Finally, the Medical Group supplies compressor and vacuum pumps used in medical and laboratory applications.
The growth stock features a strong IBD Composite Rating of 93, alongside an Earnings Per Share Rating of 84. Ingersol Rand is currently ranked second among the 46 stocks in the industrial machinery industry group.
Stocks To Buy And Watch: Ingersol Rand
Both Ingersol’s year-over-year earnings growth and sales growth have accelerated in the most recent quarter. The firm posted EPS growth of 43%. Meanwhile, sales growth went from 124% in the third quarter to 149% in the recent December-ended fourth quarter. This represents an average sales growth per quarter of 136.5% over the last two quarters, thanks in large part to its merger with Gardner Denver.
Ingersoll’s top line had fallen sharply four quarters in a row in 2019, then lifted 105% and 101% in the first two quarters of 2020.
The company reported earnings and revenue that topped Wall Street’s estimates on Feb. 22. The firm showed earnings of 53 cents a share for the quarter, beating analysts’ consensus of 45 cents a share. Additionally, the North Carolina-based company said revenue reached $1.51 billion, beating analysts’ expectations for sales of $1.46 billion.
Analysts expect the company’s EPS to rise 26% for the March-ending quarter vs. a year earlier to 34 cents. Sales are expected to reach $1.3 billion, according to IBD data. That would represent a revenue increase of 3%.
Analysts also see the company’s earnings for full-year 2021 growing 22% to $1.89 per share.
The firm noted that despite a Covid-19 resurgence near the end of 2020, the company still was able to deliver stronger-than-anticipated fourth-quarter performance.
“Despite challenges posed by the COVID-19 resurgence, we continued to successfully navigate the pandemic and deliver shareholder value,” said Vicente Reyna, CEO of Ingersol Rand, in a recent news release. “We delivered on our commitments in 2020. We closed on the transformational Ingersoll Rand Industrial business transaction in March and delivered better than expected Year 1 synergy benefits.”
Growth Stock In Buy Zone
Shares of this IBD 50 growth stock have had a strong 2021 so far, rising more than 8% and outpacing the major indexes. Ingersoll formed a flat base with a 47.88 buy point in recent weeks. Shares are now inside the 5% buy zone from the proper entry after an initial breakout on Feb. 24.
Ingersoll stock has been holding above its 50-day moving average as a key area of support since the company reported earnings on Feb. 22. The stock’s relative strength line has been trending higher in recent weeks but has pulled back from its high on Mar. 8. Ideally, the RS line — which compares a stock’s performance with that of the S&P 500 — will be at or near new highs as the stock breaks out.
Investors should be aware that Ingersoll’s Relative Strength Rating of 72 doesn’t meet the minimum requirement of 80 we like to see for growth stocks breaking out. However, IBD research has found that some top large caps have shown lower RS ratings at the start of their runs. When long bases form, the 12-month price performance tends to be flat.
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