IR - Embedded Expectations Analysis - 2018 08 08
Ingersoll-Rand Plc (IR:USA) trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 16.4x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management has concerns about volatility in steel and copper prices, their ability to make strategic investments in value-accretive technology, and their ability to sustain growth, operating income, and robust margin levelsSpecifically, management appears concerned about demand levels in the energy sector, and about volatility in steel and copper prices. Also, they may lack confidence in their ability to make strategic investments in value-accretive technology and about their implementation of smart meter technology. Additionally, they may be concerned about their ability to sustain growth in their global climate business as well as operating income improvement in both their Climate and Industrial segments, and may be concerned about their ability to sustain recent margin expansions
Ingersoll-Rand provides products, services and solutions to enhance air in homes and buildings, transport and protect food. Co.'s segments are: Climate. which includes Trane® and American Standard® Heating & Air Conditioning, providing heating, ventilation and air conditioning systems, and commercial and residential building services, parts, support and controls, energy services and building automation as well as transport temperature control solutions; and Industrial, which includes compressed air and gas systems and services, power tools, material handling systems, ARO® fluid management equipment, as well as Club Car ® golf, utility and rough terrain vehicles.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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