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.
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.
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:
- 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.
- 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.
- 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.
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