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 41 industry peers in the Building Products industry. TT has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. While showing a medium growth rate, TT is valued expensive at the moment. With these ratings, TT could be worth investigating further for quality investing!.
1. Profitability
1.1 Basic Checks
TT had positive earnings in the past year.
TT had a positive operating cash flow in the past year.
Each year in the past 5 years TT has been profitable.
In the past 5 years TT always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of TT (12.75%) is better than 73.17% of its industry peers.
TT has a better Return On Equity (34.43%) than 85.37% of its industry peers.
Looking at the Return On Invested Capital, with a value of 20.04%, TT belongs to the top 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 above the industry average of 12.93%.
The last Return On Invested Capital (20.04%) for TT is above the 3 year average (17.76%), which is a sign of increasing profitability.
| 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
With a decent Profit Margin value of 12.94%, TT is doing good in the industry, outperforming 70.73% of the companies in the same industry.
TT's Profit Margin has improved in the last couple of years.
TT has a Operating Margin of 17.64%. This is in the better half of the industry: TT outperforms 73.17% of its industry peers.
TT's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 35.69%, TT is in line with its industry, outperforming 56.10% of the companies in the same industry.
In the last couple of years the Gross Margin of TT has grown nicely.
| 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
TT has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, TT has less shares outstanding
The number of shares outstanding for TT has been reduced compared to 5 years ago.
TT has a better debt/assets ratio than last year.
2.2 Solvency
TT has an Altman-Z score of 5.85. This indicates that TT is financially healthy and has little risk of bankruptcy at the moment.
TT's Altman-Z score of 5.85 is fine compared to the rest of the industry. TT outperforms 70.73% of its industry peers.
TT has a debt to FCF ratio of 1.72. This is a very positive value and a sign of high solvency as it would only need 1.72 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.72, TT is in the better half of the industry, outperforming 78.05% of the companies in the same industry.
A Debt/Equity ratio of 0.58 indicates that TT is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.58, TT perfoms like the industry average, outperforming 53.66% 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 | 5.85 |
ROIC/WACC2.8
WACC7.15%
2.3 Liquidity
A Current Ratio of 1.21 indicates that TT should not have too much problems paying its short term obligations.
The Current ratio of TT (1.21) is worse than 85.37% of its industry peers.
A Quick Ratio of 0.88 indicates that TT may have some problems paying its short term obligations.
TT has a worse Quick ratio (0.88) than 80.49% 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 | 1.21 | ||
| Quick Ratio | 0.88 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 23.98% over the past year.
TT shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 11.99% yearly.
TT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 12.22%.
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)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
The Earnings Per Share is expected to grow by 8.63% on average over the next years. This is quite good.
Based on estimates for the next years, TT will show a small growth in Revenue. The Revenue will grow by 6.65% on average per year.
EPS Next Y17%
EPS Next 2Y14.27%
EPS Next 3Y13.39%
EPS Next 5Y8.63%
Revenue Next Year7.76%
Revenue Next 2Y7.27%
Revenue Next 3Y7.15%
Revenue Next 5Y6.65%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 29.69, which means the current valuation is very expensive for TT.
Compared to the rest of the industry, the Price/Earnings ratio of TT indicates a slightly more expensive valuation: TT is more expensive than 73.17% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of TT to the average of the S&P500 Index (28.29), we can say TT is valued inline with the index average.
TT is valuated quite expensively with a Price/Forward Earnings ratio of 25.38.
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.
The average S&P500 Price/Forward Earnings ratio is at 21.08. TT is valued slightly more expensive when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.69 | ||
| Fwd PE | 25.38 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of TT indicates a slightly more expensive valuation: TT is more expensive than 75.61% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, TT is valued a bit more expensive than 60.98% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.93 | ||
| EV/EBITDA | 20.08 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of TT may justify a higher PE ratio.
A more expensive valuation may be justified as TT's earnings are expected to grow with 13.39% in the coming years.
PEG (NY)1.75
PEG (5Y)2.48
EPS Next 2Y14.27%
EPS Next 3Y13.39%
5. Dividend
5.1 Amount
TT has a Yearly Dividend Yield of 1.13%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.27, TT pays a bit more dividend than its industry peers.
With a Dividend Yield of 1.13, TT pays less dividend than the S&P500 average, which is at 2.52.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.13% |
5.2 History
On average, the dividend of TT grows each year by 9.56%, which is quite nice.
TT has paid a dividend for at least 10 years, which is a reliable track record.
TT has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)9.56%
Div Incr Years14
Div Non Decr Years14
5.3 Sustainability
TT pays out 29.50% of its income as dividend. This is a sustainable payout ratio.
TT's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP29.5%
EPS Next 2Y14.27%
EPS Next 3Y13.39%
333.16
+2.52 (+0.76%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryBuilding Products
Earnings (Last)
Earnings (Next)
Inst Owners88.3%
Inst Owner Change1.18%
Ins Owners0.3%
Ins Owner Change-0.25%
Market Cap74.72B
Analysts71.18
Price Target416.65 (25.06%)
Short Float %1.57%
Short Ratio2.16
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.13% |
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)-0.93%
PT rev (3m)-4.3%
EPS NQ rev (1m)0.24%
EPS NQ rev (3m)-0.29%
EPS NY rev (1m)-0.5%
EPS NY rev (3m)0.32%
Revenue NQ rev (1m)0.15%
Revenue NQ rev (3m)0.22%
Revenue NY rev (1m)-0.06%
Revenue NY rev (3m)0.17%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.69 | ||
| Fwd PE | 25.38 | ||
| P/S | 3.77 | ||
| P/FCF | 26.93 | ||
| P/OCF | 23.76 | ||
| P/B | 10.02 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.08 |
EPS(TTM)11.22
EY3.37%
EPS(NY)13.13
Fwd EY3.94%
FCF(TTM)12.37
FCFY3.71%
OCF(TTM)14.02
OCFY4.21%
SpS88.45
BVpS33.25
TBVpS-8.82
PEG (NY)1.75
PEG (5Y)2.48
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 | 5.85 |
F-Score8
WACC7.15%
ROIC/WACC2.8
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%
EPS Next 2Y14.27%
EPS Next 3Y13.39%
EPS Next 5Y8.63%
Revenue 1Y (TTM)12.22%
Revenue growth 3Y11.96%
Revenue growth 5Y8.69%
Sales Q2Q%10.17%
Revenue Next Year7.76%
Revenue Next 2Y7.27%
Revenue Next 3Y7.15%
Revenue Next 5Y6.65%
EBIT growth 1Y20.95%
EBIT growth 3Y19.52%
EBIT growth 5Y15.23%
EBIT Next Year23.47%
EBIT Next 3Y13.3%
EBIT Next 5Y7.68%
FCF growth 1Y32.85%
FCF growth 3Y26.67%
FCF growth 5Y10.75%
OCF growth 1Y31.64%
OCF growth 3Y25.58%
OCF growth 5Y10.38%