Why is Trane Technologies (TT) up 2.3% since its last earnings report?

It has been about a month since Trane Technologies (TT) last reported earnings. Shares rose about 2.3% in that time, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Trane Technologies set to slow down? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

Trane Technologies’ first-quarter earnings beat estimates

Trane Technologies announced better-than-expected results for the first quarter of 2024.

Adjusted EPS of $1.94 surpassed the Zacks Consensus Estimate by 18.3% and increased 37.6% year over year.

Revenues of $4.2 billion exceeded consensus by 5.7% and increased 15% year-over-year on a reported basis and 14% organically. Reservations increased by 18% year-on-year and 17% organically.

Revenue and bookings

Americas segment revenues of $3.3 billion exceeded our estimate of $3.1 billion and increased 17% year-over-year on a reported basis and 15% organically. Reservations increased 21% on a reported basis and 20% organically to $4 billion.

Europe, Middle East and Africa segment revenues were $553.4 million, up 8% year-over-year on a reported basis and 4% on an organic basis, missing our estimate of $603.6 million. Bookings increased 12% year-over-year and 7% organically to $660.2 million.

Revenues in the Asia Pacific segment increased 11% year-over-year on a reported basis and 16% on an organic basis to USD 327.3 million, exceeding our estimate of USD 314 million. Bookings of $396.9 million increased 2% on a reported basis and 6% organically.

Operating margin performance

Adjusted operating income was $640 million, up 36% year-over-year. Adjusted operating margin improved 230 basis points to 15.2%.

Key balance sheet and cash flow data

Trane ended the quarter with a cash balance of $850 million, up from $1.1 billion in the prior quarter. Debt balance was $4.9 billion compared to $4.8 billion in the prior quarter. It generated $254 million of cash from operations and $175 million of free cash flow during the quarter.

The story continues

Guidelines 2024

The company raised its guidance for 2024. It currently expects revenue to grow 8% to 9% on a reported and organic basis. Previous expectations assumed growth on a reported basis from 7% to 8% and on an organic basis from 6% to 7%.

Adjusted EPS is expected to be in the range of $10.30 to $10.40, up from the previously expected $10 to $10.3.

How have estimates changed since then?

It turns out that new estimates have been trending upwards over the past month.

VGM results

Currently, Trane Technologies has an average Growth Score of C, but its Momentum Score is performing much better at A. However, the stock is rated C on the value side, ranking in the middle 20% for this investment strategy.

Overall, the stock has a Total VGM Score of B. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for the stock are trending upwards, and the scale of these revisions looks promising. Notably, Trane Technologies carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Trane Technologies belongs to the Zacks Technology Services industry. Another stock in the same industry, Seagate (STX), has gained 9.9% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

Seagate reported revenue of $1.66 billion in its most recent quarter, representing a -11% year-over-year change. EPS of $0.33 for the same period compared to -$0.28 a year ago.

For the current quarter, Seagate is expected to report earnings per share of $0.69, which would represent a year-over-year change of +483.3%. Over the past 30 days, the Zacks Consensus Estimate has moved +15.7%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Seagate. The stock also has a VGM Rating of B.

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