TRANE TECHNOLOGIES PLC (TT)
IE00BK9ZQ967 - Common Stock
Overall TT gets a fundamental rating of 5 out of 10. We evaluated TT against 43 industry peers in the Building Products industry. While TT belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. TT is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
TT had positive earnings in the past year.
In the past year TT had a positive cash flow from operations.
Each year in the past 5 years TT has been profitable.
TT had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
TT has a better Return On Assets (11.13%) than 67.44% of its industry peers.
TT has a better Return On Equity (31.25%) than 83.72% of its industry peers.
With a decent Return On Invested Capital value of 18.79%, TT is doing good in the industry, outperforming 79.07% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for TT is in line with the industry average of 13.68%.
The last Return On Invested Capital (18.79%) for TT is above the 3 year average (15.41%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.13% | ||
| ROE | 31.25% | ||
| ROIC | 18.79% |
ROA(3y)9.34%
ROA(5y)7.93%
ROE(3y)26.84%
ROE(5y)22.66%
ROIC(3y)15.41%
ROIC(5y)12.99%
1.3 Margins
With a decent Profit Margin value of 11.81%, TT is doing good in the industry, outperforming 72.09% of the companies in the same industry.
TT's Profit Margin has been stable in the last couple of years.
Looking at the Operating Margin, with a value of 16.85%, TT is in the better half of the industry, outperforming 67.44% 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 33.87%. This is comparable to the rest of the industry: TT outperforms 55.81% of its industry peers.
TT's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 16.85% | ||
| PM (TTM) | 11.81% | ||
| GM | 33.87% |
OM growth 3Y8.22%
OM growth 5Y5.37%
PM growth 3Y18.59%
PM growth 5Y1.1%
GM growth 3Y2.54%
GM growth 5Y1.55%
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.
Compared to 1 year ago, TT has an improved debt to assets ratio.
2.2 Solvency
TT has an Altman-Z score of 5.75. This indicates that TT is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of TT (5.75) is better than 67.44% of its industry peers.
TT has a debt to FCF ratio of 2.10. This is a good value and a sign of high solvency as TT would need 2.10 years to pay back of all of its debts.
TT has a better Debt to FCF ratio (2.10) than 60.47% of its industry peers.
A Debt/Equity ratio of 0.59 indicates that TT is somewhat dependend on debt financing.
TT has a Debt to Equity ratio of 0.59. This is comparable to the rest of the industry: TT outperforms 41.86% of its industry peers.
Although TT does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.59 | ||
| Debt/FCF | 2.1 | ||
| Altman-Z | 5.75 |
ROIC/WACC2.61
WACC7.19%
2.3 Liquidity
TT has a Current Ratio of 1.13. 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 1.13 is on the low side compared to the rest of the industry. TT is outperformed by 86.05% of its industry peers.
TT has a Quick Ratio of 1.13. This is a bad value and indicates that TT is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.74, TT is not doing good in the industry: 81.40% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.13 | ||
| Quick Ratio | 0.74 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 25.07% over the past year.
The Earnings Per Share has been growing by 10.00% on average over the past years. This is quite good.
Looking at the last year, TT shows a quite strong growth in Revenue. The Revenue has grown by 11.81% in the last year.
Measured over the past years, TT shows a small growth in Revenue. The Revenue has been growing by 7.45% on average per year.
EPS 1Y (TTM)25.07%
EPS 3Y26.7%
EPS 5Y10%
EPS growth Q2Q37.59%
Revenue 1Y (TTM)11.81%
Revenue growth 3Y12.38%
Revenue growth 5Y7.45%
Revenue growth Q2Q15%
3.2 Future
TT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.56% yearly.
TT is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.89% yearly.
EPS Next Y16.34%
EPS Next 2Y13.87%
EPS Next 3Y12.95%
EPS Next 5Y9.56%
Revenue Next Year7.46%
Revenue Next 2Y6.85%
Revenue Next 3Y6.67%
Revenue Next 5Y7.89%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same 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
The Price/Earnings ratio is 34.20, 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 74.42% of the companies listed in the same industry.
TT is valuated rather expensively when we compare the Price/Earnings ratio to 28.05, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 27.92 indicates a quite expensive valuation of TT.
Based on the Price/Forward Earnings ratio, TT is valued a bit more expensive than the industry average as 69.77% of the companies are valued more cheaply.
TT's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 20.30.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.2 | ||
| Fwd PE | 27.92 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, TT is valued a bit more expensive than the industry average as 72.09% of the companies are valued more cheaply.
TT's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. TT is more expensive than 72.09% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 31.95 | ||
| EV/EBITDA | 22.76 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
TT has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as TT's earnings are expected to grow with 12.95% in the coming years.
PEG (NY)2.09
PEG (5Y)3.42
EPS Next 2Y13.87%
EPS Next 3Y12.95%
5. Dividend
5.1 Amount
TT has a Yearly Dividend Yield of 1.03%. Purely for dividend investing, there may be better candidates out there.
TT's Dividend Yield is a higher than the industry average which is at 1.19.
With a Dividend Yield of 1.03, TT pays less dividend than the S&P500 average, which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.03% |
5.2 History
The dividend of TT is nicely growing with an annual growth rate of 8.94%!
TT has been paying a dividend for at least 10 years, so it has 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)8.94%
Div Incr Years3
Div Non Decr Years13
5.3 Sustainability
32.65% of the earnings are spent on dividend by TT. This is a low number and sustainable payout ratio.
TT's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP32.65%
EPS Next 2Y13.87%
EPS Next 3Y12.95%
TRANE TECHNOLOGIES PLC
NYSE:TT (5/8/2024, 7:23:40 PM)
After market: 327.6 0 (0%)327.6
+1.71 (+0.52%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryBuilding Products
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap74.15B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.03% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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Min EPS beat(2)
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EPS beat(8)
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EPS beat(16)
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Revenue beat(2)
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Revenue beat(4)
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Revenue beat(8)
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Revenue beat(12)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.2 | ||
| Fwd PE | 27.92 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)2.09
PEG (5Y)3.42
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.13% | ||
| ROE | 31.25% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 16.85% | ||
| PM (TTM) | 11.81% | ||
| GM | 33.87% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.94
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.59 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.13 | ||
| Quick Ratio | 0.74 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)25.07%
EPS 3Y26.7%
EPS 5Y
EPS growth Q2Q
EPS Next Y16.34%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)11.81%
Revenue growth 3Y12.38%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y