Trane Technologies Q3 Earnings: Can NYSE:TT Hit Its $1.34 EPS Target?

in EARNINGS/INVESTING IDEAS by

Trane Technologies plc (NYSE:TT) is scheduled to report Q3 earnings results on October 28, 2020.

The company is expected to report earnings of $1.34/share on revenue of $3.154 billion. The consensus earnings per share (EPS) of $1.34/share is based on a poll of 22 analysts and represents a decline in eps of −32.8% over the same quarter last year, when the company reported earnings of $1.99/share.

The revenue forecast of $3.154 billion based on a poll of 16 analysts implies a year-over-year (YoY) decline in revenue of −27.4%. Last year the company reported $4.344 billion in revenue for the quarter.

Expected to report EPS contraction of −32.8% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $3,154.31 $4,344.30 −27.4%
EPS $1.34 $1.99 −32.8%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Trane Technologies plc for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.76 $1.27 67.8% Beat
Q1, 2020 $0.52 $0.43 −16.7% Missed
Q4, 2019 $1.42 $1.40 −1.7% Missed
Q3, 2019 $1.91 $1.99 4.0% Beat
Q2, 2019 $2.05 $2.09 1.7% Beat
Q1, 2019 $0.80 $0.89 11.3% Beat
Q4, 2018 $1.29 $1.32 2.0% Beat
Q3, 2018 $1.71 $1.75 2.3% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 6.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $103.71 $110.86 6.9% Increase
May 5, 2020 $85.15 $79.82 −6.3% Decline
January 29, 2020 $130.78 $135.14 3.3% Increase
October 29, 2019 $122.08 $127.79 4.7% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.83, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.83 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Trane Technologies plc is currently trading at $128.73/share, up 1.0% for the day. The company is trading at approximately 87.7% of its 52-week high of $146.85/share. The company’s stock price is up 16.1% since the last earnings report and down −1.1% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 58.87 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:TT Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 26.97 and a forward P/E multiple of 32.77.

Trane Technologies plc’s current share price also implies a price-to-book (P/B) multiple of 5.19. The following table summarizes some other key fundamental ratios:

Data as of October 21, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $128.73
P/E Ratio 27.0x
P/E Ratio (Fwd) 32.8x
PEG Ratio −0.9
Total Debt / Total Capital 15.8%
Levered Free Cash Flow $1.183 billion
EV / EBITDA 14.3x

Finbox

Trane Technologies plc is a large-cap stock with a market capitalization of $30.812 billion and a total enterprise value of $34.182 billion. The company operates in the Industrials sector and the Building Products industry.

Trane Technologies plc provides climate control solutions for buildings, homes, and transportation. It offers 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; industrial refrigeration 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. It 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, 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. Trane Technologies plc markets and sells its products under the American Standard, Nexia, Thermo King, and Trane 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.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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