) reportedly is planning to divest its security technology
The Security Technology business recorded sales of $391
million in the third quarter of 2012, down 7% year over year and
nearly 5% sequentially. The year-over-year decline was primarily
due to the weakened sales in the overseas business and lower
sales in the Americas.
Ingersoll Rand is a globally diversified industrial company,
which designs, manufactures, sells a range of industrial and
commercial products and services. It provides energy-efficient
solutions, residential solutions, technology and security related
services both in the domestic and international
Ingersoll Rand, which competes with
Johnson Controls Inc.
), has been streamlining its business to better focus on core
business in recent times. Earlier, the company divested its
security installation and service business, which is sold under
the Integrated Systems and Services brand in United States and
Canada. The company also closed the sale of 60% stake of its
Hussmann business to Clayton, Dubilier & Rice, LLC.
The company modified its portfolio by divesting its cyclical,
low-growth and asset-intensive businesses and simultaneously
acquiring businesses supporting consistent revenue and earnings
Along with the divestiture, the company is also expected to
announce a new $2 billion share buyback program and a roughly 30%
increase in the company's dividend, which currently stands at
$0.16 per quarter.
In the third quarter of 2012, Ingersoll-Rand bought-back 7.6
million shares. By Oct 18, 2012, the company repurchased 10.8
million shares for $480 million. Since the inception of the share
repurchase program in June 2011, the company has bought-back 47
million shares for $1.6 billion.
With the structural changes in the company's top management
level, its overall operations are expected to improve.
Additionally, buyback of shares and dividend increase underline
IR's strategy to increase shareholders' value in the long
However, earnings estimates have been static in the last few
days even though the company reported better-than-expected
results for the third quarter of 2012.
Hence, we maintain a Neutral recommendation on Ingersoll-Rand.
Our Neutral recommendation is supported by a Zacks #3 Rank, which
translates into a short-term rating of Hold.
INGERSOLL RAND (IR): Free Stock Analysis
JOHNSON CONTROL (JCI): Free Stock Analysis
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