Did Ingersoll-Rand Plc’s (NYSE:IR) Recent Earnings Growth Beat The Trend?

Measuring Ingersoll-Rand Plc’s (NYSE:IR) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess IR’s recent performance announced on 31 December 2018 and weigh these figures against its long-term trend and industry movements.

Check out our latest analysis for Ingersoll-Rand

Did IR beat its long-term earnings growth trend and its industry?

IR’s trailing twelve-month earnings (from 31 December 2018) of US$1.4b has increased by 2.3% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 18%, indicating the rate at which IR is growing has slowed down. To understand what’s happening, let’s take a look at what’s transpiring with margins and if the rest of the industry is feeling the heat.

NYSE:IR Income Statement, March 20th 2019
NYSE:IR Income Statement, March 20th 2019

In terms of returns from investment, Ingersoll-Rand has fallen short of achieving a 20% return on equity (ROE), recording 20% instead. However, its return on assets (ROA) of 8.8% exceeds the US Machinery industry of 7.8%, indicating Ingersoll-Rand has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Ingersoll-Rand’s debt level, has increased over the past 3 years from 12% to 15%.

What does this mean?

Though Ingersoll-Rand’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Ingersoll-Rand gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Ingersoll-Rand to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for IR’s future growth? Take a look at our free research report of analyst consensus for IR’s outlook.
  2. Financial Health: Are IR’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.