Ingersoll Rand’s revenue trend
Ingersoll Rand’s (IR) total revenue has grown at a CAGR (compound annual growth rate) of 3.8% since 2013. Its Climate and Industrial segments have grown at CAGRs of 4.2% and 2.4%, respectively, since 2013.
Climate and Industrial contributed 77% and 23%, respectively, to the company’s consolidated revenue in 2015.
For 2015, total revenue increased by 3% and up to 5% organically. Excluding the foreign exchange impact, the revenue would have increased 7%. The growth in 2015 can be attributed to mid-single-digit organic growth in North America and low-single-digit growth outside North America.
Ingersoll Rand’s operating profit and margin trend
Ingersoll Rand’s (IR) operating profit has grown at a CAGR of 9.9% since 2013. The Climate segment’s operating profit grew at a CAGR of 18.0%. But the Industrial segment witnessed a decrease in operating profit, declining at a CAGR of 9.1% since 2013.
The Climate and Industrial segments contributed 78% and 22%, respectively, to the company’s consolidated operating profit for 2015.
We’ve seen steady improvement in Ingersoll Rand’s operating margins for the last few years. This is due to higher operational efficiency coupled with organic growth.
Some of the players in the HVAC (heating, ventilation, and air conditioning) space are Honeywell (HON), ABB (ABB), Atlas Copco, and Lennox International (LII). Honeywell’s (HON) core organic revenues grew 1% in 2015 compared to 2014. For 2016, HON expects its organic revenue growth to be 1%–2%. It foresees organic revenue growth to be stronger in 2017 than 2016. For 2016, HON expects its EPS (earnings per share) to be $6.50–$6.70, up 6%–10%.
IR is part of the Guggenheim Mid-Cap Core ETF (CZA) and accounts for 2.0% of its total holdings. Investors in CZA could benefit if IR continues to deliver operational excellence and surpasses targets set for 2016. Viacom (VIA) and DTE Energy Holding (DTE) are among CZA’s top ten holdings and account for 2.8% and 2.3%, respectively.