Shares of industrial goods manufacturer
) scaled a 52-week high of $63.69 on Jun 19, before closing the
trading session a notch lower at $63.63 for a healthy one-year
return of 44.7%. Despite its strong price appreciation, this Zacks
Rank #3 (Hold) stock still has enough fundamental strength to drive
it upward. The stock is currently trading at a forward P/E of 19.9x
and has long-term earnings growth expectation of 15.3%.
Ingersoll continues to focus on improving the efficiencies and
capabilities of products and services within its core businesses
after the divesture of the commercial and residential security
businesses. The company also has a solid foundation of global
brands and leading market share in all major product lines. The
geographic and industry diversity coupled with a large installed
product base provides ample growth opportunities within service,
spare parts and replacement revenue streams. Additionally, the
company's complementary portfolio of products and services is
likely to assist it in strengthening the market position and
achieving high productivity.
In order to further improve its growth curve, Ingersoll is
concentrating on its strategic priorities. These include a
disciplined capital allocation; strong and flexible balance sheet
position; and cash flows enhancement to support dividend growth.
The structural changes in the company are further expected to
unlock additional value. We believe that such moves along with its
robust operating platform and an efficient management team will
help in the execution of these strategic priorities and drive net
asset value and dividend growth in the future as well.
Earnings estimate revisions for second-quarter 2014 have moved up
in the last couple of months, reflecting bullish sentiments on the
stock. For the ongoing quarter, Ingersoll projects revenues to
increase by 4%-5% year over year. Adjusted earnings from continuing
operations are expected to be in the range of $1.09 to $1.13 per
share, with reported earnings in the range of $1.08 to $1.12. The
current Zacks Consensus Estimate for second-quarter 2014 is pegged
Other Stocks to Consider
Stocks in the industry that warrant a look include
Illinois Tool Works Inc.
), each carrying a Zacks Rank #2 (Buy).
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