Ingersoll Rand Inc (IR)

Conclusion

Ingersoll Rand Inc makes air and gas compression equipment, fluid transfer systems, and precision pumps for industrial, medical and laboratory uses. On 9 November 2026 the shares closed at 86.88 USD, giving a market capitalisation of 33.36 billion USD.

The verdict is fair. Today's price-to-earnings ratio of 24.1 sits 42.1% below its ten-year median of 41.6, and EV to EBITDA of 15.2 sits 34.9% below its median of 23.4. The discounted cash flow gives 86.63 USD per share at a discount rate of 10.7%, and the fair value from historical multiples is 112.74 USD. The fair value band runs from 79.75 to 119.63 USD with a midpoint of 99.69 USD, a margin of safety of 14.7%. The reverse DCF implies revenue growth of 10.9% a year, against 14.0% revenue growth over five years, although free cash flow per share grew only 6.1% a year over the same period.

The strongest supports are a net debt to EBITDA of 1.4x, an Altman Z-score of 3.69 in the safe zone, and free cash flow conversion of 109.6% over the last twelve months. The weakest numbers are interest coverage of 7.3x, which is on watch, an EPS compound growth of -0.6% over three years, and a return on invested capital of 9.8% that sits level with a WACC of 9.85%. If earnings keep shrinking while the share count rises, the fair value case would weaken.

Financial health

Financial strength is green, held up by the Altman Z-score of 3.69, net debt to EBITDA of 1.4x and a current ratio of 1.69, while interest coverage of 7.3x is only neutral. The quick ratio is 1.03 and debt to equity is 0.45, both as of 30 September 2026. The Altman model was designed for manufacturers, and Ingersoll Rand is an industrial manufacturer, so the safe zone reading fits its business. Insolvency risk is low, about 0.3% by the estimate of the Ohlson model over one to two years. Debt has fallen by 12.7% a year over five years, so the balance sheet is de-leveraging rather than building new borrowing. The company reports its interest expense, so coverage is measured directly rather than estimated.

Earnings quality

Earnings quality is yellow: free cash flow conversion and a negative accrual ratio are good, but the Piotroski score of 6 out of 9 is only neutral and share count is rising. Free cash flow conversion is 109.6% on a trailing twelve-month basis and 150.2% averaged over five years. The accrual ratio is -0.0427, meaning reported earnings are backed by cash. Stock-based compensation is 0.71% of revenue, leaving free cash flow after it at 1.46 billion USD. The share count has grown by 0.93% a year over five years, so there have been no net buybacks. The Beneish M-score is not available. The company beat earnings estimates in four of its last eight quarters, missed in one, and its average surprise was 3.9%. Analysts raised the current-year estimate by 2.8% over 90 days, with three upward revisions and none down.

Profitability

Profitability is green, with the operating margin of 26.3% well above its ten-year median of 12.4%. The gross margin is 38.3% against a median of 38.6%, close to its long-run level. The net margin is 17.2% against a median of 8.95%. Return on invested capital is 9.8% against a WACC of 9.85%, and the ROIC minus WACC value is -0.05 percentage points, which is neutral. The five-year median ROIC is 5.65%, so returns have improved. Return on equity is 13.2%. The DuPont split for 2025 shows a net margin of 7.6%, an asset turnover of 0.42 and an equity multiplier of 1.81, so the return rests on margins and some leverage rather than on turnover.

Growth

Growth is yellow: revenue growth is strong, but earnings per share have shrunk. Revenue has compounded at 8.95% over three years, 14.0% over five years and 13.7% over ten. It grew in eight of the last ten comparable years. Free cash flow per share has compounded at 17.7% over three years, 6.1% over five and 19.0% over ten. Earnings per share fell at a compound rate of 0.6% over three years, which is the weak point of the record. The estimate for next year's earnings per share implies 8.25% growth, with two upward and one downward revision in the last 30 days. The growth record is therefore dominated by revenue and cash generation rather than per-share earnings.

Valuation

Valuation is yellow, with a verdict of fair. Every current multiple sits below its ten-year median: price-to-earnings at 24.1 against 41.6, EV to EBITDA at 15.2 against 23.4, price to free cash flow at 22.0 against 28.5, price to sales at 4.14 against 4.33, and price to book at 3.18 against 3.37. The premiums are -42.1%, -34.9%, -22.9%, -4.4% and -5.6% respectively. The discounted cash flow gives 86.63 USD per share at a discount rate of 10.7%, with 52.7% of value in the terminal value. The fair value band runs from 79.75 to 119.63 USD, with a midpoint of 99.69 USD and a margin of safety of 14.7% at 86.88 USD. These are order-of-magnitude estimates built on a 5% equity risk premium and capped growth, not a price target. The dividend yield is 0.09% and the payout on free cash flow is 2.1%.

Risks

Each weak number carries a specific risk. Interest coverage of 7.3x leaves less room if operating profit falls, while a return on invested capital level with the WACC means new capital adds little value. Shrinking earnings per share over three years, combined with a share count rising 0.93% a year, would erode per-share value even if total cash flow grows. The Beneish M-score is not available, so the test for earnings manipulation cannot be reported. This analysis has no debt maturity schedule and no revenue by segment, so refinancing risk and the performance of the two business segments cannot be judged. The valuation depends on fixed assumptions, so a change in the discount rate or growth would move the fair value band materially.