10Y annualized return is
excellent
at 20.8% per year
TT has met or exceeded earnings expectations in
all
recent quarters (10/10)
Moderate Growth Expectations
Strong Return on Equity
Healthy Gross Profit Margin
Decent Operating Profit Margin
Strong Interest Coverage Ratio
Manageable Debt Levels
🏆 Proven Business Model
🚀 Strong Competitive Position
💰 High Profitability
🌱 Strong Growth Outlook
🔍 Focus on Innovation
High Valuation Ratios
Elevated EV Ratios
Low Net Profit Margin
Lower Quick Ratio
⚖️ Market Volatility
🌍 Global Economic Risks
Trane Technologies exhibits strong business quality with a proven model, robust profitability, and a strong competitive position, despite facing market volatility in certain segments. The future prospects are bright with strong growth guidance and a focus on innovation, although global economic risks remain a concern.
Analysis Date: January 30, 2025
Last Updated: March 12, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Trane Technologies plc is a company that makes products to help control temperature and air quality in buildings and vehicles. They design and sell air conditioners, heaters, and refrigeration systems, which keep homes, offices, and trucks comfortable and fresh. Additionally, they provide services to maintain and repair these systems. Founded in 1885 and based in Ireland, Trane Technologies is known for its Trane and Thermo King brands.
Streams of revenue
Geographic Distribution
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
Latest News
SWORDS, Ireland--(BUSINESS WIRE)--Trane Technologies (NYSE:TT), a global climate innovator, has been recognized for its leadership in corporate transp...
Trane Technologies (TT) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a lik...
Investors looking for ways to find stocks that are set to beat quarterly earnings estimates should check out the Zacks Earnings ESP.
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$440.43
Current Market Price: $317.85
IV/P Ratio: 1.39x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
28.000000000000004%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for TT
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (27.81)
P/B ratio ≤ 1.5 (9.58)
Current ratio ≥ 2.0 (1.21x)
Long-term debt < Net current assets (3.40x)
Margin of safety (28.000000000000004%)
TT does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
35.56%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
35.69%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
9.84%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
The gross profit margin of 35.69% reflects a strong ability to retain a significant portion of revenue after accounting for the cost of goods sold, indicating efficient production or product quality.
An operating profit margin of 17.67% shows that the company effectively manages its operating expenses in relation to its sales, contributing positively to overall profitability.
A net profit margin of 9.84% indicates that while the company is profitable, a significant portion of revenue is consumed by expenses, which may limit growth potential.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.49x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.21x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
With an interest coverage ratio of 14.70, the company can easily meet its interest obligations, indicating strong financial health and low risk of default.
A debt-to-equity ratio of 0.49 shows that the company is moderately leveraged, which can be a sign of prudent financial management, as it uses debt to finance growth while maintaining equity strength.
The quick ratio of 0.88 indicates that the company may struggle to cover its short-term liabilities with its most liquid assets, which could pose a liquidity risk.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Trane Technologies has a robust business model that emphasizes sustainability and innovation, driving significant customer demand. The company has a proven track record of financial performance, with a consistent revenue CAGR of 12% since 2020 and an impressive 109% free cash flow conversion in 2024.
Trane's market position is strengthened by its extensive portfolio across 14 commercial verticals, enabling broad-based growth. The company has a robust pipeline of orders and a backlog of $6.75 billion, providing visibility into future revenues.
The company has demonstrated strong profitability with adjusted EBITDA margin expansion of 110 basis points in Q4 2024 and a sustained focus on margin enhancement through productivity and price realization.
The company faces challenges in the transport refrigeration market and residential segments, indicating potential headwinds in certain areas. The expected downturn in transport markets could impact overall performance in the near term.
Trane anticipates 7-8% organic revenue growth for 2025, driven by strong demand in commercial HVAC and the normalization of residential markets. The company is positioned to capitalize on growth in high-growth verticals and multi-year CapEx cycles.
The acquisition of BrainBox AI enhances Trane's service offerings and efficiency capabilities. This investment in technology is expected to drive future growth and improve service margins as the company integrates AI into its operations.
Tightened credit policies in China and uncertainties in global markets could pose risks to growth, particularly in the Asia Pacific region. The company must navigate these challenges while maintaining its growth trajectory.