Reasons to Retain Trane Technologies (TT) in Your Portfolio

Trane Technologies plc TT is currently focusing on business transformation with a view to achieve cost savings.

The company’s earnings for 2022 and 2023 are expected to improve 16.1% and 11.6%, respectively, year over year. Revenues for 2022 and 2023 are anticipated to improve 9.3% and 5%, respectively.

Factors That Bode Well

Trane Technologies continues to pursue its broader growth objectives by focusing on steps to increase revenue stream from parts, services, controls, used equipment and rentals. Also, the company remains focused on improving the quality of its products and services, as well as its operating efficiencies in order to achieve sustained improvement in earnings and cash flow.

Trane Technologies plc Revenue (TTM)

Trane Technologies plc Revenue (TTM)

Trane Technologies plc revenue-ttm | Trane Technologies plc Quote

The company remains focused on improving its business operating system and innovation through business transformation initiatives and investments. With a view to lower its cost structure, Trane targets $300 million of annualized savings by 2023.

Trane has a consistent record of rewarding its shareholders through dividend payments and share repurchases. In 2021, 2020 and 2019, the company had repurchased shares worth $1.10 billion, $250 million and $750.1 million, respectively. It paid $561.1 million, $507.3 million and $510.1 million in dividends during 2021, 2020 and 2019, respectively. Such moves indicate Trane’s commitment toward boosting shareholders’ value and underline its confidence in its business.

Some Risks

Trane’s current ratio at the end of first-quarter 2022 was pegged at 1.31, lower than the current ratio of 1.36 reported at fourth-quarter 2021 end and 1.59 at the end of the prior-year quarter. Decreasing current ratio is not desirable as it indicates that the company may have problems meeting its short-term obligations.

Trane’s shares have lost 35.6% year to date compared with 40.9% decline of the industry it belongs to.

Trane Technologies plc Price

Trane Technologies plc price | Trane Technologies plc Quote

Zacks Rank and Stocks to Consider

Trane currently carries a Zacks Rank #3 (Hold).

A couple of top-ranked stocks the broader Business Services sector that investors can consider are Cross Country Healthcare CCRN and Gartner IT, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cross Country Healthcare has an expected earnings growth rate of 49.4% for the current year. It has a trailing four-quarter earnings surprise of 29.2%, on average.

CCRN has a long-term earnings growth rate of 6.9%. Shares have surged 4.3% in the past year.

Gartner’s shares have surged 6.4% in the past year. The company delivered a trailing four-quarter earnings surprise of 24.2%, on average.

The Zacks Consensus Estimate for IT’s earnings in the current year has moved up 8.6% in the past 30 days.

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