TRANE TECHNOLOGIES PLC (TT) Stock Fundamental Analysis
NYSE:TT - New York Stock Exchange, Inc. - IE00BK9ZQ967 - Common Stock - Currency: USD
Overall TT gets a fundamental rating of 7 out of 10. We evaluated TT against 41 industry peers in the Building Products industry. TT scores excellent points on both the profitability and health parts. This is a solid base for a good stock. TT is valied quite expensively at the moment, while it does show a decent growth rate. This makes TT very considerable for quality investing!
1. Profitability
1.1 Basic Checks
In the past year TT was profitable.
TT had a positive operating cash flow in the past year.
In the past 5 years TT has always been profitable.
TT had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 13.60%, TT belongs to the best of the industry, outperforming 80.49% of the companies in the same industry.
TT has a better Return On Equity (36.53%) than 87.80% of its industry peers.
With an excellent Return On Invested Capital value of 21.61%, TT belongs to the best of the industry, outperforming 90.24% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for TT is significantly above the industry average of 12.62%.
The 3 year average ROIC (17.76%) for TT is below the current ROIC(21.61%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.6% | ||
| ROE | 36.53% | ||
| ROIC | 21.61% |
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
The Profit Margin of TT (13.47%) is better than 73.17% of its industry peers.
In the last couple of years the Profit Margin of TT has grown nicely.
The Operating Margin of TT (18.14%) is better than 73.17% of its industry peers.
TT's Operating Margin has improved in the last couple of years.
TT's Gross Margin of 35.93% is in line compared to the rest of the industry. TT outperforms 53.66% of its industry peers.
TT's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.14% | ||
| PM (TTM) | 13.47% | ||
| GM | 35.93% |
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), TT is creating value.
The number of shares outstanding for TT has been reduced compared to 1 year ago.
TT has less shares outstanding than it did 5 years ago.
TT has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 6.93 indicates that TT is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 6.93, TT belongs to the top of the industry, outperforming 82.93% of the companies in the same industry.
The Debt to FCF ratio of TT is 1.68, which is an excellent value as it means it would take TT, only 1.68 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of TT (1.68) is better than 80.49% of its industry peers.
TT has a Debt/Equity ratio of 0.52. This is a neutral value indicating TT is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.52, TT is in line with its industry, outperforming 56.10% 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 | 0.52 | ||
| Debt/FCF | 1.68 | ||
| Altman-Z | 6.93 |
ROIC/WACC2.94
WACC7.36%
2.3 Liquidity
TT has a Current Ratio of 1.09. This is a normal value and indicates that TT is financially healthy and should not expect problems in meeting its short term obligations.
TT's Current ratio of 1.09 is on the low side compared to the rest of the industry. TT is outperformed by 87.80% of its industry peers.
A Quick Ratio of 0.74 indicates that TT may have some problems paying its short term obligations.
TT has a worse Quick ratio (0.74) than 85.37% of its industry peers.
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 | 1.09 | ||
| Quick Ratio | 0.74 |
3. Growth
3.1 Past
TT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 22.44%, which is quite impressive.
TT shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 11.99% yearly.
Looking at the last year, TT shows a quite strong growth in Revenue. The Revenue has grown by 11.43% in the last year.
TT shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 8.69% yearly.
EPS 1Y (TTM)22.44%
EPS 3Y22.59%
EPS 5Y11.99%
EPS Q2Q%26.29%
Revenue 1Y (TTM)11.43%
Revenue growth 3Y11.96%
Revenue growth 5Y8.69%
Sales Q2Q%11.22%
3.2 Future
The Earnings Per Share is expected to grow by 9.03% on average over the next years. This is quite good.
TT is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.00% yearly.
EPS Next Y18.64%
EPS Next 2Y15.34%
EPS Next 3Y14.09%
EPS Next 5Y9.03%
Revenue Next Year9.03%
Revenue Next 2Y8.08%
Revenue Next 3Y7.77%
Revenue Next 5Y7%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
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
A Price/Earnings ratio of 37.30 indicates a quite expensive valuation of TT.
Based on the Price/Earnings ratio, TT is valued a bit more expensive than the industry average as 78.05% of the companies are valued more cheaply.
Compared to an average S&P500 Price/Earnings ratio of 27.30, TT is valued a bit more expensive.
With a Price/Forward Earnings ratio of 29.31, 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 70.73% of the companies in the same industry.
TT is valuated rather expensively when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.3 | ||
| Fwd PE | 29.31 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, TT is valued expensively inside the industry as 80.49% of the companies are valued cheaper.
The rest of the industry has a similar Price/Free Cash Flow ratio as TT.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 34.45 | ||
| EV/EBITDA | 24.76 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates TT does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of TT may justify a higher PE ratio.
TT's earnings are expected to grow with 14.09% in the coming years. This may justify a more expensive valuation.
PEG (NY)2
PEG (5Y)3.11
EPS Next 2Y15.34%
EPS Next 3Y14.09%
5. Dividend
5.1 Amount
With a yearly dividend of 0.86%, TT is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 1.14, TT pays a bit more dividend than its industry peers.
With a Dividend Yield of 0.86, TT pays less dividend than the S&P500 average, which is at 2.37.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.86% |
5.2 History
The dividend of TT is nicely growing with an annual growth rate of 9.56%!
TT has paid a dividend for at least 10 years, which is 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
TT pays out 28.43% of its income as dividend. This is a sustainable payout ratio.
The dividend of TT is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP28.43%
EPS Next 2Y15.34%
EPS Next 3Y14.09%
437.5
+2.97 (+0.68%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryBuilding Products
Earnings (Last)
Earnings (Next)
Inst Owners89.68%
Inst Owner Change0.09%
Ins Owners0.26%
Ins Owner Change0.02%
Market Cap97.57B
Analysts72.94
Price Target429.47 (-1.84%)
Short Float %1.36%
Short Ratio2.12
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.86% |
Yearly Dividend3.35
Dividend Growth(5Y)9.56%
DP28.43%
Div Incr Years14
Div Non Decr Years14
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)3.61%
Min EPS beat(2)-0.28%
Max EPS beat(2)7.49%
EPS beat(4)3
Avg EPS beat(4)2.94%
Min EPS beat(4)-0.28%
Max EPS beat(4)7.49%
EPS beat(8)6
Avg EPS beat(8)3.42%
EPS beat(12)9
Avg EPS beat(12)3.42%
EPS beat(16)11
Avg EPS beat(16)2.78%
Revenue beat(2)1
Avg Revenue beat(2)0.25%
Min Revenue beat(2)-1.14%
Max Revenue beat(2)1.64%
Revenue beat(4)2
Avg Revenue beat(4)0.03%
Min Revenue beat(4)-1.14%
Max Revenue beat(4)1.64%
Revenue beat(8)3
Avg Revenue beat(8)-0.36%
Revenue beat(12)5
Avg Revenue beat(12)-0.27%
Revenue beat(16)6
Avg Revenue beat(16)-0.52%
PT rev (1m)2.59%
PT rev (3m)3.08%
EPS NQ rev (1m)0.03%
EPS NQ rev (3m)0.49%
EPS NY rev (1m)0.11%
EPS NY rev (3m)0.71%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.18%
Revenue NY rev (1m)0%
Revenue NY rev (3m)1.05%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.3 | ||
| Fwd PE | 29.31 | ||
| P/S | 4.8 | ||
| P/FCF | 34.45 | ||
| P/OCF | 30.13 | ||
| P/B | 13.03 | ||
| P/tB | N/A | ||
| EV/EBITDA | 24.76 |
EPS(TTM)11.73
EY2.68%
EPS(NY)14.93
Fwd EY3.41%
FCF(TTM)12.7
FCFY2.9%
OCF(TTM)14.52
OCFY3.32%
SpS91.07
BVpS33.59
TBVpS-9.9
PEG (NY)2
PEG (5Y)3.11
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.6% | ||
| ROE | 36.53% | ||
| ROCE | 26.8% | ||
| ROIC | 21.61% | ||
| ROICexc | 23.05% | ||
| ROICexgc | 93.1% | ||
| OM | 18.14% | ||
| PM (TTM) | 13.47% | ||
| GM | 35.93% | ||
| FCFM | 13.94% |
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 Turnover1.01
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | 1.68 | ||
| Debt/EBITDA | 0.96 | ||
| Cap/Depr | 104.83% | ||
| Cap/Sales | 2% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 79.51% | ||
| Profit Quality | 103.5% | ||
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.74 | ||
| Altman-Z | 6.93 |
F-Score8
WACC7.36%
ROIC/WACC2.94
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)22.44%
EPS 3Y22.59%
EPS 5Y11.99%
EPS Q2Q%26.29%
EPS Next Y18.64%
EPS Next 2Y15.34%
EPS Next 3Y14.09%
EPS Next 5Y9.03%
Revenue 1Y (TTM)11.43%
Revenue growth 3Y11.96%
Revenue growth 5Y8.69%
Sales Q2Q%11.22%
Revenue Next Year9.03%
Revenue Next 2Y8.08%
Revenue Next 3Y7.77%
Revenue Next 5Y7%
EBIT growth 1Y20%
EBIT growth 3Y19.52%
EBIT growth 5Y15.23%
EBIT Next Year24.37%
EBIT Next 3Y14.13%
EBIT Next 5Y8.1%
FCF growth 1Y101.35%
FCF growth 3Y26.67%
FCF growth 5Y10.75%
OCF growth 1Y90.39%
OCF growth 3Y25.58%
OCF growth 5Y10.38%