TRANE TECHNOLOGIES PLC (TT) Stock Fundamental Analysis
NYSE:TT - New York Stock Exchange, Inc. - IE00BK9ZQ967 - Common Stock - Currency: USD
TT gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 40 industry peers in the Building Products industry. TT gets an excellent profitability rating and is at the same time showing great financial health properties. While showing a medium growth rate, TT is valued expensive at the moment. These ratings would make TT suitable for quality investing!
1. Profitability
1.1 Basic Checks
In the past year TT was profitable.
In the past year TT had a positive cash flow from operations.
Each year in the past 5 years TT has been profitable.
Each year in the past 5 years TT had a positive operating cash flow.
1.2 Ratios
With a decent Return On Assets value of 12.75%, TT is doing good in the industry, outperforming 72.50% of the companies in the same industry.
TT's Return On Equity of 34.43% is amongst the best of the industry. TT outperforms 85.00% of its industry peers.
The Return On Invested Capital of TT (20.04%) is better than 87.50% of its industry peers.
TT had an Average Return On Invested Capital over the past 3 years of 17.76%. This is above the industry average of 13.20%.
The 3 year average ROIC (17.76%) for TT is below the current ROIC(20.04%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.75% | ||
| ROE | 34.43% | ||
| ROIC | 20.04% |
ROA(3y)10.97%
ROA(5y)9.1%
ROE(3y)30.74%
ROE(5y)25.66%
ROIC(3y)17.76%
ROIC(5y)15.01%
1.3 Margins
TT has a better Profit Margin (12.94%) than 70.00% of its industry peers.
TT's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 17.64%, TT is in the better half of the industry, outperforming 65.00% of the companies in the same industry.
TT's Operating Margin has improved in the last couple of years.
TT has a Gross Margin of 35.69%. This is comparable to the rest of the industry: TT outperforms 55.00% of its industry peers.
TT's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 17.64% | ||
| PM (TTM) | 12.94% | ||
| GM | 35.69% |
OM growth 3Y6.75%
OM growth 5Y6.01%
PM growth 3Y8.74%
PM growth 5Y3.71%
GM growth 3Y4.06%
GM growth 5Y2.99%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so TT is creating value.
The number of shares outstanding for TT has been reduced compared to 1 year ago.
Compared to 5 years ago, TT has less shares outstanding
The debt/assets ratio for TT has been reduced compared to a year ago.
2.2 Solvency
TT has an Altman-Z score of 6.20. This indicates that TT is financially healthy and has little risk of bankruptcy at the moment.
With a decent Altman-Z score value of 6.20, TT is doing good in the industry, outperforming 75.00% of the companies in the same industry.
The Debt to FCF ratio of TT is 1.72, which is an excellent value as it means it would take TT, only 1.72 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 1.72, TT is doing good in the industry, outperforming 72.50% of the companies in the same industry.
TT has a Debt/Equity ratio of 0.58. This is a neutral value indicating TT is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.58, TT perfoms like the industry average, outperforming 52.50% of the companies in the same industry.
Even though the debt/equity ratio score it not favorable for TT, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.58 | ||
| Debt/FCF | 1.72 | ||
| Altman-Z | 6.2 |
ROIC/WACC2.88
WACC6.95%
2.3 Liquidity
A Current Ratio of 1.21 indicates that TT should not have too much problems paying its short term obligations.
TT's Current ratio of 1.21 is on the low side compared to the rest of the industry. TT is outperformed by 90.00% of its industry peers.
A Quick Ratio of 0.88 indicates that TT may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.88, TT is doing worse than 82.50% of the companies in the same industry.
TT does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.21 | ||
| Quick Ratio | 0.88 |
3. Growth
3.1 Past
TT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 23.98%, which is quite impressive.
Measured over the past years, TT shows a quite strong growth in Earnings Per Share. The EPS has been growing by 11.99% on average per year.
TT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 12.22%.
The Revenue has been growing by 8.69% on average over the past years. This is quite good.
EPS 1Y (TTM)23.98%
EPS 3Y22.59%
EPS 5Y11.99%
EPS Q2Q%20.28%
Revenue 1Y (TTM)12.22%
Revenue growth 3Y11.96%
Revenue growth 5Y8.69%
Sales Q2Q%10.17%
3.2 Future
TT is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.87% yearly.
Based on estimates for the next years, TT will show a small growth in Revenue. The Revenue will grow by 7.84% on average per year.
EPS Next Y17.58%
EPS Next 2Y14.41%
EPS Next 3Y13.33%
EPS Next 5Y7.87%
Revenue Next Year7.8%
Revenue Next 2Y7.35%
Revenue Next 3Y7.08%
Revenue Next 5Y7.84%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 31.62, which means the current valuation is very expensive for TT.
Based on the Price/Earnings ratio, TT is valued a bit more expensive than 75.00% of the companies in the same industry.
When comparing the Price/Earnings ratio of TT to the average of the S&P500 Index (29.63), we can say TT is valued inline with the index average.
With a Price/Forward Earnings ratio of 26.90, TT can be considered very expensive at the moment.
TT's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. TT is more expensive than 70.00% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of TT to the average of the S&P500 Index (22.68), we can say TT is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.62 | ||
| Fwd PE | 26.9 |
4.2 Price Multiples
77.50% of the companies in the same industry are cheaper than TT, based on the Enterprise Value to EBITDA ratio.
62.50% of the companies in the same industry are cheaper than TT, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 28.68 | ||
| EV/EBITDA | 22.02 |
4.3 Compensation for Growth
TT's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
TT has an outstanding profitability rating, which may justify a higher PE ratio.
TT's earnings are expected to grow with 13.33% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.8
PEG (5Y)2.64
EPS Next 2Y14.41%
EPS Next 3Y13.33%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.04%, TT has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.10, TT pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.29, TT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.04% |
5.2 History
On average, the dividend of TT grows each year by 9.56%, which is quite nice.
TT has been paying a dividend for at least 10 years, so it has a reliable track record.
TT has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)9.56%
Div Incr Years14
Div Non Decr Years14
5.3 Sustainability
29.50% of the earnings are spent on dividend by TT. This is a low number and sustainable payout ratio.
The dividend of TT is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP29.5%
EPS Next 2Y14.41%
EPS Next 3Y13.33%
354.83
-11.81 (-3.22%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryBuilding Products
Earnings (Last)
Earnings (Next)
Inst Owners87.66%
Inst Owner Change0.91%
Ins Owners0.3%
Ins Owner Change-0.7%
Market Cap79.58B
Analysts71.52
Price Target438.37 (23.54%)
Short Float %1.41%
Short Ratio2.33
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.04% |
Yearly Dividend3.35
Dividend Growth(5Y)9.56%
DP29.5%
Div Incr Years14
Div Non Decr Years14
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.21%
Min EPS beat(2)-0.28%
Max EPS beat(2)0.7%
EPS beat(4)3
Avg EPS beat(4)4.39%
Min EPS beat(4)-0.28%
Max EPS beat(4)13.3%
EPS beat(8)6
Avg EPS beat(8)2.78%
EPS beat(12)9
Avg EPS beat(12)3.64%
EPS beat(16)11
Avg EPS beat(16)5.97%
Revenue beat(2)0
Avg Revenue beat(2)-0.96%
Min Revenue beat(2)-1.14%
Max Revenue beat(2)-0.78%
Revenue beat(4)2
Avg Revenue beat(4)0.15%
Min Revenue beat(4)-1.14%
Max Revenue beat(4)2.12%
Revenue beat(8)2
Avg Revenue beat(8)-0.86%
Revenue beat(12)5
Avg Revenue beat(12)-0.15%
Revenue beat(16)6
Avg Revenue beat(16)-0.46%
PT rev (1m)0.69%
PT rev (3m)9.2%
EPS NQ rev (1m)-0.54%
EPS NQ rev (3m)-0.81%
EPS NY rev (1m)0.82%
EPS NY rev (3m)1.23%
Revenue NQ rev (1m)0.04%
Revenue NQ rev (3m)-0.48%
Revenue NY rev (1m)0.21%
Revenue NY rev (3m)0.47%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.62 | ||
| Fwd PE | 26.9 | ||
| P/S | 4.01 | ||
| P/FCF | 28.68 | ||
| P/OCF | 25.3 | ||
| P/B | 10.67 | ||
| P/tB | N/A | ||
| EV/EBITDA | 22.02 |
EPS(TTM)11.22
EY3.16%
EPS(NY)13.19
Fwd EY3.72%
FCF(TTM)12.37
FCFY3.49%
OCF(TTM)14.02
OCFY3.95%
SpS88.45
BVpS33.25
TBVpS-8.82
PEG (NY)1.8
PEG (5Y)2.64
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.75% | ||
| ROE | 34.43% | ||
| ROCE | 24.86% | ||
| ROIC | 20.04% | ||
| ROICexc | 22.6% | ||
| ROICexgc | 92.46% | ||
| OM | 17.64% | ||
| PM (TTM) | 12.94% | ||
| GM | 35.69% | ||
| FCFM | 13.99% |
ROA(3y)10.97%
ROA(5y)9.1%
ROE(3y)30.74%
ROE(5y)25.66%
ROIC(3y)17.76%
ROIC(5y)15.01%
ROICexc(3y)19.7%
ROICexc(5y)17.25%
ROICexgc(3y)86.55%
ROICexgc(5y)79.73%
ROCE(3y)22.03%
ROCE(5y)18.62%
ROICexcg growth 3Y9.37%
ROICexcg growth 5Y29.75%
ROICexc growth 3Y15.09%
ROICexc growth 5Y17.85%
OM growth 3Y6.75%
OM growth 5Y6.01%
PM growth 3Y8.74%
PM growth 5Y3.71%
GM growth 3Y4.06%
GM growth 5Y2.99%
F-Score8
Asset Turnover0.98
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.58 | ||
| Debt/FCF | 1.72 | ||
| Debt/EBITDA | 1.11 | ||
| Cap/Depr | 97.68% | ||
| Cap/Sales | 1.87% | ||
| Interest Coverage | 15 | ||
| Cash Conversion | 81.08% | ||
| Profit Quality | 108.07% | ||
| Current Ratio | 1.21 | ||
| Quick Ratio | 0.88 | ||
| Altman-Z | 6.2 |
F-Score8
WACC6.95%
ROIC/WACC2.88
Cap/Depr(3y)91.41%
Cap/Depr(5y)79.68%
Cap/Sales(3y)1.8%
Cap/Sales(5y)1.63%
Profit Quality(3y)93.42%
Profit Quality(5y)105.39%
High Growth Momentum
Growth
EPS 1Y (TTM)23.98%
EPS 3Y22.59%
EPS 5Y11.99%
EPS Q2Q%20.28%
EPS Next Y17.58%
EPS Next 2Y14.41%
EPS Next 3Y13.33%
EPS Next 5Y7.87%
Revenue 1Y (TTM)12.22%
Revenue growth 3Y11.96%
Revenue growth 5Y8.69%
Sales Q2Q%10.17%
Revenue Next Year7.8%
Revenue Next 2Y7.35%
Revenue Next 3Y7.08%
Revenue Next 5Y7.84%
EBIT growth 1Y20.95%
EBIT growth 3Y19.52%
EBIT growth 5Y15.23%
EBIT Next Year23.22%
EBIT Next 3Y13.25%
EBIT Next 5Y7.84%
FCF growth 1Y32.85%
FCF growth 3Y26.67%
FCF growth 5Y10.75%
OCF growth 1Y31.64%
OCF growth 3Y25.58%
OCF growth 5Y10.38%