Ingersoll Rand Inc. IR has failed to impress investors with its recent operational performance due to rising costs and high debt levels. Also, given the company’s extensive international presence, foreign currency headwind is an added uncertainty.

Based in Davidson, NC, Ingersoll Rand is a global industrial company with expertise in industrial and mission-critical flow creation technologies. IR currently carries a Zacks Rank #4 (Sell). In the past six months, the stock has declined 0.6% against the industry’s 7.4% growth.

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Rising Costs: Cost inflation is weighing on Ingersoll Rand’s operations. The company’s cost of sales increased 11.2% year over year in 2023 due to the rising cost of raw materials and component parts. Ingersoll Rand’s selling and administrative expenses surged 16.1% in 2023. The trend continued in the first nine months of 2024, with selling and administrative expenses increasing 7.5%.

This drove up the selling and administrative expenses as a percentage of revenues by 40 basis points to 19%. The company has been witnessing high costs associated with investments to support growth in areas like demand generation, digital and other IT-related investments. It expects to incur corporate costs of $170 million in 2024. Escalating costs are a pressure on the bottom line.

High Debt Level: High debt levels raise financial obligations and hurt the company’s profitability. At the end of third-quarter 2024, its long-term debt was $4.8 billion, higher than $2.7 billion at 2023-end. Also, interest expenses in the first nine months of 2024 remained high at $151.4 million, up 27% year over year. High debt levels can increase its financial obligations and prove detrimental to profitability in the quarters ahead.

Forex Woes: Ingersoll Rand has considerable exposure to regions outside the United States. Its significant international presence exposes it to political and economic disruptions, all of which can directly affect its profits. Also, the company is exposed to headwinds arising from unfavorable movement in foreign currencies.

Stocks to Consider

Some better-ranked companies from the same space are discussed below.

Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 8.4%.

Gates Industrial Corporation plc GTES currently carries a Zacks Rank #2 (Buy). GTES delivered a trailing four-quarter average earnings surprise of 11.8%.

In the past 60 days, the Zacks Consensus Estimate for Gates Industrial’s 2024 earnings has remained unchanged.

Generac Holdings Inc. GNRC presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 10.8%. 

The Zacks Consensus Estimate for GNRC’s 2024 earnings has increased 1% in the past 60 days.

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Ingersoll Rand Inc. (IR) : Free Stock Analysis Report

Graham Corporation (GHM) : Free Stock Analysis Report

Generac Holdings Inc. (GNRC) : Free Stock Analysis Report

Gates Industrial Corporation PLC (GTES) : Free Stock Analysis Report

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