Industrial manufacturing company Ingersoll Rand (NYSE: IR) met Wall Streets revenue expectations in Q3 CY2025, with sales up 5.1% year on year to $1.96 billion. Its non-GAAP profit of $0.86 per share was in line with analysts’ consensus estimates.

Is now the time to buy Ingersoll Rand? Find out by accessing our full research report, it’s free for active Edge members.

“We delivered positive organic orders growth in the third quarter across both segments,” said Vicente Reynal, chairman and chief executive officer of Ingersoll Rand.

Company Overview

Started with the invention of the steam drill, Ingersoll Rand (NYSE: IR) provides mission-critical air, gas, liquid, and solid flow creation solutions.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Ingersoll Rand grew its sales at a mediocre 6.4% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Ingersoll Rand’s annualized revenue growth of 5.7% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Ingersoll Rand’s organic revenue was flat. Because this number is lower than its two-year revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, Ingersoll Rand grew its revenue by 5.1% year on year, and its $1.96 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 6.2% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its newer products and services will not lead to better top-line performance yet.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Ingersoll Rand has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 14.7%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Ingersoll Rand’s operating margin rose by 4.6 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Ingersoll Rand generated an operating margin profit margin of 19.2%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Ingersoll Rand’s EPS grew at an astounding 19.3% compounded annual growth rate over the last five years, higher than its 6.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Ingersoll Rand’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Ingersoll Rand’s operating margin was flat this quarter but expanded by 4.6 percentage points over the last five years. On top of that, its share count shrank by 4.5%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Ingersoll Rand, its two-year annual EPS growth of 6.9% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Ingersoll Rand reported adjusted EPS of $0.86, up from $0.84 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Ingersoll Rand’s full-year EPS of $3.22 to grow 10.8%.

Key Takeaways from Ingersoll Rand’s Q3 Results

We enjoyed seeing Ingersoll Rand beat analysts’ organic revenue expectations this quarter. On the other hand, its full-year EBITDA guidance missed and full-year EPS guidance was lowered, which is usually a bad sign. Zooming out, we think this was a mixed quarter. Investors were likely hoping for more, and shares traded down 6.2% to $73.84 immediately after reporting.

Big picture, is Ingersoll Rand a buy here and now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.