2 Reasons to Watch IR and 1 to Stay Cautious

July 18, 2025 at 00:02 AM EDT

IR Cover Image

Over the past six months, Ingersoll Rand’s shares (currently trading at $88.27) have posted a disappointing 6.2% loss, well below the S&P 500’s 4.1% gain. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.

Following the drawdown, is now an opportune time to buy IR? Find out in our full research report, it’s free.

Why Does Ingersoll Rand Spark Debate?

Started with the invention of the steam drill, Ingersoll Rand (NYSE: IR) provides mission-critical air, gas, liquid, and solid flow creation solutions.

Two Things to Like:

1. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Ingersoll Rand’s EPS grew at an astounding 18.4% compounded annual growth rate over the last five years, higher than its 4.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Ingersoll Rand Trailing 12-Month EPS (Non-GAAP)

2. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Ingersoll Rand has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 15.7% over the last five years.

Ingersoll Rand Trailing 12-Month Free Cash Flow Margin

One Reason to be Careful:

Slow Organic Growth Suggests Waning Demand In Core Business

In addition to reported revenue, organic revenue is a useful data point for analyzing Gas and Liquid Handling companies. This metric gives visibility into Ingersoll Rand’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, Ingersoll Rand’s organic revenue averaged 1.7% year-on-year growth. This performance was underwhelming and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations. Ingersoll Rand Organic Revenue Growth

Final Judgment

Ingersoll Rand’s merits more than compensate for its flaws. With the recent decline, the stock trades at 25.4× forward P/E (or $88.27 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

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