Ingersoll Rand (NYSE:IR) Posts Better-Than-Expected Sales In Q4 CY2025

Industrial manufacturing company Ingersoll Rand (NYSE:IR) reported Q4 CY2025 results

, with sales up 10.1% year on year to $2.09 billion. Its non-GAAP profit of $0.96 per share was 6.6% above analysts’ consensus estimates.

Is now the time to buy Ingersoll Rand?

“Against the backdrop of a complex global environment, we delivered strong growth, earnings, and free cash flow, reflecting the resilience and execution strength of our portfolio,” said Vicente Reynal, chairman and chief executive officer of Ingersoll Rand.

Company Overview

Started with the invention of the steam drill, Ingersoll Rand (NYSE:IR) provides mission-critical air, gas, liquid, and solid flow creation solutions.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Ingersoll Rand grew its sales at a mediocre 7.3% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Ingersoll Rand’s recent performance shows its demand has slowed as its annualized revenue growth of 5.5% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

This quarter, Ingersoll Rand reported year-on-year revenue growth of 10.1%, and its $2.09 billion of revenue exceeded Wall Street’s estimates by 2.6%.

Looking ahead, sell-side analysts expect revenue to grow 4.1% over the next 12 months, similar to its two-year rate. This projection is underwhelming and implies its products and services will see some demand headwinds.

Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming.

Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Ingersoll Rand has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 15.2%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Ingersoll Rand’s operating margin rose by 4 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Ingersoll Rand generated an operating margin profit margin of 18.7%, down 1.3 percentage points year on year. Since Ingersoll Rand’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Ingersoll Rand’s EPS grew at an astounding 17.5% compounded annual growth rate over the last five years, higher than its 7.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Ingersoll Rand’s earnings can give us a better understanding of its performance. As we mentioned earlier, Ingersoll Rand’s operating margin declined this quarter but expanded by 4 percentage points over the last five years. Its share count also shrank by 6.8%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Ingersoll Rand, its two-year annual EPS growth of 6.2% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q4, Ingersoll Rand reported adjusted EPS of $0.96, up from $0.84 in the same quarter last year. This print beat analysts’ estimates by 6.6%. Over the next 12 months, Wall Street expects Ingersoll Rand’s full-year EPS of $3.34 to grow 6.6%.

Key Takeaways from Ingersoll Rand’s Q4 Results

We enjoyed seeing Ingersoll Rand beat analysts’ revenue expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. On the other hand, its full-year EBITDA guidance slightly missed. Overall, this print had some key positives. The stock traded up 2.7% to $96.89 immediately after reporting.

Sure, Ingersoll Rand had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy.