My early May call on Ingersoll-Rand (IR)
is about as close as I typically get to a “valuation doesn’t matter”
call with industrials, as I thought the company’s strong execution and
healthy underlying market exposures set the stage for good ongoing
relative performance. Since then I wouldn’t say that Ingersoll-Rand’s
performance has shot the lights out, though the stock has continued to
outperform the wider industrial sector.
I continue to believe the merger of IR’s Industrial business with Gardner Denver (GDI) makes sense (and a more competitive player against Atlas Copco (OTCPK:ATLKY)
), and I likewise continue to believe that Ingersoll-Rand is reshaping
itself into a strong player in a market with a strong long-term outlook.
Valuation remains a hang up; while I do believe that IR’s stronger
reported growth and healthy margins can support the stock during this
industrial downturn, the long-term prospective returns aren’t as
appealing to me.
Click here for more:
Strong Performance And Transformation Driving Ingersoll-Rand
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