IR

Analysis of Ingersoll Rand (IR)

Technical Analysis IR demonstrates strong bullish momentum, significantly outperforming the market over recent periods despite high volatility. While currently positioned neutrally relative to its 52-week range (~10% below highs), its elevated beta and historical drawdown warrant caution against potential pullbacks.

Fundamentals Revenue has recovered to $1.96 billion with improved profitability, supported by a healthy debt structure and strong liquidity. However, operational efficiencies remain modest, with relatively low asset turnover and ROE indicating room for improvement in capital utilization.

Valuation & Peer Comparison Valuation metrics signal overvaluation, with high TTM P/E and EV/EBITDA ratios suggesting limited earnings support at current prices. A definitive conclusion requires industry benchmark comparisons, as sector norms could contextualize whether these premiums are justified.

Risk Assessment IR exhibits above-average volatility (beta = 1.33) and a notable maximum drawdown (~29%), implying higher sensitivity to market swings. While short interest is low, investors should monitor trading volumes and sector-specific risks.

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Investment Recommendation

Consider with Caution. IR shows strong operational recovery and financial health, but its elevated valuation and volatility temper near-term appeal. Investors with higher risk tolerance may find its momentum and fundamentals attractive, though a clearer peer comparison is advised before commitment. Await stabilization in valuation metrics or sector-wide data for a more decisive entry point.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the provided analysis, here is a 12-month outlook for Ingersoll Rand (IR):

12-Month Outlook for IR

The outlook for IR over the next year is cautiously neutral, balancing solid fundamentals against a demanding valuation. Key positive catalysts include the continuation of its strong operational recovery, robust financial health, and potential for market-beating momentum if industrial sector sentiment remains favorable. However, the primary risks are its significant volatility (beta of 1.33) and the potential for a valuation-based pullback, as its high TTM P/E and EV/EBITDA ratios suggest the stock price may be ahead of its earnings support. In the absence of a specific analyst target, a prudent target range would be contingent on the stock re-rating towards sector valuation norms, requiring investors to monitor for either an expansion in earnings or a more attractive entry point.

Wall Street Consensus

Most Wall Street analysts are optimistic about IR's 12-month outlook, with consensus target around $85.99, indicating expected upside potential.

Overall, IR has investment potential but also faces challenges. Here are key factors to weigh before investing.

IR has delivered strong positive returns over both short-term and medium-term periods, significantly outperforming the market during this bullish phase.

Over the past three months, IR has surged 9.37%, substantially outpacing the broader market by 6.0% while demonstrating higher volatility with a beta of 1.33. The stock's 2.86% one-month gain further confirms this positive momentum trend despite the elevated volatility.

Currently trading at $85.83, IR sits about 69% above its 52-week low but remains 10.5% below its yearly high, positioning it closer to a neutral zone rather than extreme overbought or oversold territory. However, the stock's historical volatility and substantial 29.2% maximum drawdown indicate investors should remain cautious of potential pullbacks.

Revenue & Profitability Revenue improved to $1.96 billion in Q3 2025 with a net income ratio of 12.5%, marking a significant recovery from Q2's net loss. The company demonstrates solid gross profit margins near 44%, though operating expenses remain substantial. Profitability trends show volatility, with Q2 results heavily impacted by elevated other expenses that normalized materially in Q3.

Financial Health IR maintains a conservative debt structure with a debt ratio of 27% and interest coverage of 5.8x, indicating manageable leverage. The current ratio of 2.2 reflects strong short-term liquidity, while cash flow to debt ratio of 0.07 suggests modest debt servicing capacity from operations. Cash position appears adequate with cash per share of $2.94 supporting ongoing operations.

Operational Efficiency The company shows moderate operational metrics with ROE of 2.4% and asset turnover of 0.11, indicating relatively low capital efficiency. Inventory turnover of 0.87 and operating cycle of 169 days suggest potential working capital optimization opportunities. Fixed asset turnover of 2.2 demonstrates reasonable utilization of property and equipment investments.

Valuation Level: IR's current valuation metrics present a concerning picture, with a TTM PE of 67.07 and an EV/EBITDA of 72.23 indicating significant overvaluation relative to earnings and cash flow generation. The forward PE of 33.89 suggests some earnings growth is anticipated, though it remains elevated, while the negative PEG ratio of -0.11 signals either negative earnings growth expectations or calculation anomalies that undermine traditional growth-adjusted valuation perspectives. The high PB ratio of 3.34 and PS ratio of 4.62 further confirm the stock is trading at premium multiples to its asset base and revenue.

Peer Comparison: Unfortunately, without corresponding industry average data, a meaningful comparative analysis cannot be conducted to determine IR's relative valuation standing against sector peers. The absence of industry benchmarks prevents assessment of whether these elevated multiples are justified by sector norms or represent an outlier positioning. For a complete evaluation, obtaining industry-specific comparable ratios would be essential to contextualize these valuation metrics properly.

Based on the provided metrics, IR carries above-average volatility risk compared to the broader market. With a Beta of 1.332, the stock is theoretically about 33% more volatile than the market, meaning it's likely to experience larger price swings both upward and downward. This elevated sensitivity to market movements is corroborated by the significant one-year maximum drawdown of -29.16%, indicating the stock has recently endured a substantial peak-to-trough decline, which represents a high level of price risk for investors.

Regarding other specific risks, the lack of reported short interest suggests that there is not a significant contingent of investors actively betting on the stock's price to decline, which can sometimes be a positive signal. However, this absence does not eliminate other potential risks such as company-specific operational challenges, liquidity constraints if trading volume is low, or broader sector-wide headwinds that are not captured by these particular metrics.