Ingersoll Rand trades at $104.94 per share and has moved in lockstep with the market. It has returned 12.3% over the last six months while the S&P 500 has gained 13%.

Is now a good time to buy IR? Find out in our full research report, it’s free.

Why Are We Positive On Ingersoll Rand?

Started with the invention of the steam drill, Ingersoll Rand (NYSE:IR) provides mission-critical air, gas, liquid, and solid flow creation solutions.

1. Skyrocketing Revenue Shows Strong Momentum

Long-term growth is the most important, but within industrials, a stretched historical view may miss new industry trends or demand cycles. Ingersoll Rand’s annualized revenue growth of 11.9% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

2. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Ingersoll Rand’s EPS grew at a remarkable 13.3% compounded annual growth rate over the last five years, higher than its 6.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

3. Increasing Free Cash Flow Margin Juices Financials

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

As you can see below, Ingersoll Rand’s margin expanded by 8 percentage points over the last five years. This is encouraging because it gives the company more optionality. Its free cash flow margin for the trailing 12 months was 18.3%.

Final Judgment

These are just a few reasons Ingersoll Rand is a high-quality business worth owning, but at $104.94 per share (or 29.2x forward price-to-earnings), is now the right time to buy the stock? See for yourself in our in-depth research report, it’s free.

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