2024-06-23 22:15:20 ET
Summary
- Investors have lifted the bid on Ingersoll Rand stock in recent months, supported by fundamental drivers.
- Q1 FY 2024 numbers were strong with a focus on operational efficiency with management guiding to FCF growth in FY 2024.
- Despite the strengths, investors look to have captured forward growth and return characteristics at current multiples of 30x earnings.
Investment Summary
The industrials sector has potentially some of the least appealing price/value characteristics of all the S&P 500. When comparing the current market-cap-weighted value of the sector to its next 12 months' projected earnings growth, it sits at the bottom of the pack, in contrast to the basic materials sector at the front. Whilst it might be easier to scour those at the left of the chart in Figure 1, arguably, the hurdle is quite low for those companies to the right.
Those companies in the industrials sector with 1) great financial performance [growth] with 2) excellent economic health [high returns on capital with economic profit] and 3) priced at mouth-watering valuations are all idiosyncratic diamonds in the financial rough....
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Ingersoll Rand: Excellent Economics Well Reflected At Current Multiples