Trane Technologies (TT) AI Stock Analysis

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Trane Technologies

(NYSE:TT)

76Outperform

Trane Technologies shows robust financial performance with strong revenue and profit growth, efficient operations, and solid cash flow. Technical indicators suggest the stock is currently overbought. While valuation metrics indicate a high P/E ratio, the latest earnings call provided positive guidance, supporting a strong outlook. Recent board changes are expected to contribute positively to long-term strategic goals.

Positive Factors

Americas CHVAC Demand

Americas CHVAC demand was solid with bookings up high single digits and revenues up mid-teens in both equipment and services.

Earnings

Following earnings, Trane Technologies was rallying intraday, remaining an outperformer and ending up approximately 8% at the close.

Stock Upgrade

Trane has been upgraded to a Buy, with a DCF-derived target price of USD415, indicating confidence in its long-term growth potential.

Negative Factors

Backlog and Order Setup

Tougher order setup for H1, lingering DeepSeek rumblings could create some investor angst.

Demand and Market Concerns

Negative catalysts could include weakening CHVAC demand, continued deterioration in the China business, and/or evidence of tariff-related uncertainty.

Tariffs and Economic Growth

Uncertainties in the tariff landscape and concerns about consumer and economic growth create an uncertain outlook for US industrial stocks.

Trane Technologies (TT) vs. S&P 500 (SPY)

Market Cap

$90.70B

Dividend Yield0.85%

Average Volume (3M)1.69M

Price to Earnings (P/E)33.5

Beta (1Y)1.34

Revenue Growth11.43%

EPS Growth28.49%

CountryUS

Employees45,000

SectorIndustrials

Sector Strength77

IndustryConstruction

Share Statistics

EPS (TTM)2.45

Shares Outstanding223,018,000

10 Day Avg. Volume1,657,878

30 Day Avg. Volume1,694,844

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap0.88

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit11.33

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$399.90

Price Target Upside-1.80% Downside

Rating ConsensusHold

Number of Analyst Covering12

Trane Technologies Business Overview & Revenue Model

Company DescriptionTrane Technologies plc, together with its subsidiaries, engages in the designing, manufacturing, selling, and servicing of solutions for heating, ventilation, air conditioning, and transport refrigeration. It offers air conditioners, exchangers, and handlers; airside and terminal devices; auxiliary power units; chillers; coils and condensers; gensets; furnaces; heat pumps; home automation products; humidifiers; hybrid and non-diesel transport refrigeration, and ice energy storage solutions; indoor air quality assessments and related products; large and light commercial unitary products; motor replacements; refrigerant reclamation products; thermostats/controls; transport heater products; variable refrigerant flow products; and water source heat pumps. The company also provides building management, control, ductless, geothermal, package heating and cooling, temporary heating and cooling, and unitary systems; bus, rail, and multi-pipe heating, ventilation, and air conditioning systems; and container, cryogenic, diesel-powered, electric-powered trailer and truck, hybrid-powered trailer, industrial, rail, self-powered truck, trailer, and vehicle-powered truck refrigeration systems, as well as aftermarket and OEM parts and supplies. In addition, it offers energy and facility management, installation and performance contracting, repair and maintenance, and rental services. It markets and sells its products under the Trane and Thermo King brands through sales offices, distributors, and dealers in the United States; and through sales and service companies with a supporting chain of distributors worldwide. The company was formerly known as Ingersoll-Rand Plc and changed its name to Trane Technologies plc in March 2020. Trane Technologies plc was founded in 1885 and is headquartered in Swords, Ireland.

How the Company Makes MoneyTrane Technologies generates revenue through the sale of its HVAC systems, which include air conditioners, furnaces, heat pumps, and ventilation products. In addition to equipment sales, the company offers installation, maintenance, and repair services, which constitute a significant portion of its income. Trane Technologies also provides building automation and energy management solutions, which help clients optimize energy usage and reduce costs. The company collaborates with various partners and stakeholders to innovate and expand its offerings, focusing on sustainability and efficiency as key value propositions. Revenue is further supported by its global presence and the continuous demand for energy-efficient climate solutions.

Trane Technologies Key Performance Indicators (KPIs)

Any

Adjusted EBITDA by Geography

Adjusted EBITDA by Geography
Highlights profitability across different regions, revealing where the company is most efficient and where it may face challenges or opportunities for margin improvement.

Chart InsightsTrane Technologies' Americas segment is experiencing robust growth, with recent quarters showing record EBITDA levels, driven by strong Commercial HVAC bookings. Despite challenges in transport refrigeration and tariff impacts, the company is effectively managing costs. EMEA's EBITDA margin is under pressure due to reinvestment, while APAC faces headwinds in China. Overall, the company's strategic pricing and cost management are expected to sustain high performance, with guidance indicating continued strong growth for 2025.

Data provided by:

Main Street Data

Trane Technologies Financial Statement Overview

Summary

Trane Technologies demonstrates strong financial health with significant revenue growth, healthy profit margins, and a solid balance sheet. The company exhibits efficient operations and strong cash flow generation, although it carries a moderate level of debt.

Income Statement

Very Positive

Trane Technologies shows strong performance with a consistent increase in revenue, evidenced by significant revenue growth from 2020 to the TTM period. Gross profit and net profit margins are healthy, with a gross profit margin of 35.97% and a net profit margin of 13.27% in the TTM. The company has maintained stable EBIT and EBITDA margins, demonstrating operational efficiency and profitability.

Balance Sheet

Positive

The company's balance sheet reflects a solid financial position with a reasonable debt-to-equity ratio of 0.49 and an equity ratio of 48.85% in the TTM. Return on equity is robust at 21.09%, indicating effective management of shareholder equity. However, some potential risks include the relatively high total debt, which could impact financial flexibility.

Cash Flow

Very Positive

Trane Technologies exhibits strong cash flow performance with a substantial free cash flow growth rate in the TTM. The operating cash flow to net income ratio is favorable at 1.56, suggesting efficient cash generation relative to net income. The free cash flow to net income ratio of 1.42 further supports the company's ability to generate cash beyond its earnings, highlighting operational strength.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
19.84B	17.68B	15.99B	14.14B	12.45B
	Gross Profit
7.08B	5.86B	4.96B	4.47B	3.80B
	EBIT
3.50B	2.89B	2.42B	2.02B	1.53B
	EBITDA
3.86B	3.15B	2.72B	2.32B	1.83B
	Net Income Common Stockholders
2.57B	2.02B	1.76B	1.42B	854.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.59B	1.10B	1.22B	2.16B	3.29B
	Total Assets
20.15B	19.39B	18.08B	18.06B	18.16B
	Total Debt
4.77B	4.78B	4.84B	4.84B	5.27B
	Net Debt
3.18B	3.68B	3.62B	2.68B	1.98B
	Total Liabilities
12.66B	12.37B	11.98B	11.79B	11.73B
	Stockholders Equity
7.46B	7.00B	6.11B	6.27B	6.43B
Cash Flow		Free Cash Flow
2.77B	2.09B	1.21B	1.37B	1.29B
	Operating Cash Flow
3.15B	2.39B	1.50B	1.59B	1.44B
	Investing Cash Flow
-562.90M	-1.17B	-540.40M	-545.70M	-376.20M
	Financing Cash Flow
-2.02B	-1.35B	-1.85B	-2.13B	884.30M

Trane Technologies Technical Analysis

Technical Analysis Sentiment

Positive

Last Price407.24

Price Trends

50DMA

348.54

Positive

100DMA

361.25

Positive

200DMA

367.34

Positive

Market Momentum

MACD

16.41

Negative

RSI

74.64

Negative

STOCH

96.72

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TT, the sentiment is Positive. The current price of 407.24 is above the 20-day moving average (MA) of 358.06, above the 50-day MA of 348.54, and above the 200-day MA of 367.34, indicating a bullish trend. The MACD of 16.41 indicates Negative momentum. The RSI at 74.64 is Negative, neither overbought nor oversold. The STOCH value of 96.72 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TT.

Trane Technologies Risk Analysis

Trane Technologies disclosed 30 risk factors in its most recent earnings report. Trane Technologies reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Trane Technologies Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CSL	81 Outperform	$16.67B	10.52	33.11%	1.00%	-0.14%	135.52%
JCI	79 Outperform	$58.63B	34.11	14.92%	1.67%	-8.39%	51.56%
TT	76 Outperform	$90.70B	33.52	38.45%	0.85%	11.43%	28.49%
LII	74 Outperform	$19.93B	25.03	131.48%	0.82%	7.78%	30.10%
AAON	72 Outperform	$7.93B	51.97	19.85%	0.43%	8.24%	-11.66%
CARR	71 Outperform	$60.17B	16.25	25.69%	1.13%	0.14%	202.13%
Sector *	64 Neutral	$4.25B	11.69	5.23%	249.83%	4.04%	-9.46%

* Industrials Sector Average

Performance Comparison

Trane Technologies

407.24

77.59

23.54%

AAON

Aaon

99.43

21.98

28.38%

CSL

Carlisle Companies

391.19

-22.46

-5.43%

JCI

Johnson Controls

91.24

26.77

41.52%

LII

Lennox International

576.38

91.60

18.90%

CARR

Carrier Global

70.50

5.84

9.03%

Trane Technologies Earnings Call Summary

Earnings Call Date:Apr 30, 2025

(Q1-2025)

% Change Since: 15.22%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Neutral

Trane Technologies reported strong financial performance in Q1 2025 with record bookings in Commercial HVAC and resilient growth in residential and service sectors. However, challenges remain in the China market, transport refrigeration, and from tariff impacts. Despite these challenges, the company is confident in its ability to manage costs and maintain strong shareholder returns.

Q1-2025 Updates

Positive Updates

Strong Q1 Financial Performance

Trane Technologies delivered strong financial results in Q1 2025, with 11% organic revenue growth, adjusted EBITDA margin expansion of 130 basis points, and 26% adjusted EPS growth.

Record Americas Commercial HVAC Bookings

The Americas segment set a new quarterly record for Commercial HVAC bookings, surpassing last year's high, demonstrating robust demand.

Resilient Residential and Service Business Growth

Residential bookings were up mid-teens and revenues up high teens, while the Service business continues to grow with a high single-digit compound annual growth rate since 2019.

Capital Allocation and Shareholder Returns

In Q1, approximately $775 million was deployed through dividends, M&A, and share repurchases, with a 12% dividend increase and $5.6 billion remaining under share repurchase authorizations.

Negative Updates

Challenges in China

The market in China remains challenging with bookings and revenues down low 30s and high 20s, respectively, against tough prior year comparisons.

Transport Refrigeration Market Decline

Transport refrigeration bookings in the Americas were down low single digits, with markets expected to decline about 20% for the year.

Tariff Impacts and Cost Inflation

The company is anticipating a cost impact from tariffs of approximately $250 million to $275 million in 2025 and is implementing pricing actions to offset these costs.

EMEA Margin Decline

Adjusted EBITDA margin in EMEA declined by 190 basis points due to high business reinvestment during the shoulder season.

Company Guidance

In the Trane Technologies Q1 2025 earnings call, the company highlighted strong financial performance with an 11% organic revenue growth and a 130 basis point expansion in adjusted EBITDA margin. Additionally, adjusted EPS grew by 26%, and the book-to-bill ratio was 113% for the enterprise. The Americas segment saw particularly robust bookings, especially in the Commercial HVAC sector, which set a new record. The company's backlog increased by approximately $500 million, with $400 million attributed to the Americas Commercial HVAC business. Despite challenges in the transport refrigeration markets, where end markets were down about 25%, Trane Technologies outperformed with mid-single-digit revenue growth. The company maintained its guidance for 2025, targeting 7% to 8% organic revenue growth and adjusted EPS of $12.70 to $12.90, expecting to perform towards the high end of these ranges. The call emphasized the company's ability to navigate dynamic macroeconomic conditions and mitigate tariff impacts through strategic pricing and cost management.

Trane Technologies Corporate Events

Executive/Board Changes

Trane Technologies Appoints Matthew Pine to Board

Positive

Feb 6, 2025

On February 6, 2025, Trane Technologies announced the appointment of Matthew Pine, President and CEO of Xylem Inc., to its Board of Directors, effective April 1, 2025. Pine’s extensive experience in global leadership and sustainability is expected to enhance Trane Technologies’ long-term value creation and support its commitment to a sustainable future.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.