Flow control and industrial solutions provider Ingersoll Rand (IR) announced that its Board of Directors has approved the initiation of a quarterly common stock dividend of $0.02 per share, which will commence in the fourth quarter of 2021. Apart from this, the company also revealed an M&A focused capital allocation strategy to enhance shareholder’s value.
Ingersoll’s Board has also approved a share repurchase program of up to $750 million. The program comes with no expiration date. The repurchases will be made through open market purchases, privately negotiated transactions or otherwise, and the prices, times and amounts will be determined by Ingersoll.
The company is targeting to maintain the flexibility of its balance sheet with a net leverage ratio of less than 2x. Ingersoll plans to strategically employ its balance sheet in pursuit of long-term growth and financial outperformance. (See Ingersoll stock charts on TipRanks)
The CEO of Ingersoll, Vicente Reynal, said, “Effective capital allocation has remained a critical pillar of our strategy, and we continue to build a strong execution track record in this area using IRX to deliver sustainable value creation. We remain focused on achieving above-market growth through smart reinvestment across our portfolio and strategic bolt-on acquisitions.”
Last month, Robert W. Baird analyst Michael Halloran reiterated a Buy rating on Ingersoll with a price target of $64, which implies upside potential of 21.4%.
Halloran noted, “Organic and inorganic investments remain the top priority, but IR’s strong FCF enables concurrent opportunistic buybacks and potentially a modest dividend.”
Overall, the rest of the Street is bullish on the stock and has a Strong Buy consensus rating based on 8 Buys and 1 Hold. The average Ingersoll price target of $58.78 implies upside potential of about 11.5% from current levels.
Ingersoll gets a 6 out of 10 on TipRanks’ Smart Score system, which indicates that the stock is likely to perform in line with market averages.
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