Ingersoll Rand Executing On Par With Its Peers, But A Cloudy Outlook And Relatively High Valuation Are Concerns

 These are "interesting" times for Ingersoll Rand (IR). Integrating the merger of the former Ingersoll Rand non-climate operations and Gardner Denver was already going to present some typical integration challenges, but now the COVID-19 outbreak and sharp industrial recession are going to make that job all the more difficult. On top of that, IR has some longer-standing, cost-reduction/efficiency initiatives that have to go well, and the company really needs to improve some of its offerings in compressors to compete more effectively with Atlas Copco (OTCPK:ATLKY).

I actually like the long-term prospects for Ingersoll Rand's business. What I don't like is how the Street already just assumes a pretty bullish set of outcomes. I thought the valuation was a little too rich back in May, and the shares have basically tracked the large industrial sector (where I don't see a lot of great bargains) since. I do see ways for Ingersoll Rand to outperform and drive higher estimates, but I wish the level of expectations were a little lower now.

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Ingersoll Rand Executing On Par With Its Peers, But A Cloudy Outlook And Relatively High Valuation Are Concerns