Trane Technologies (TT) AI Stock Analysis

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Trane Technologies

(NYSE:TT)

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Outperform 79 (OpenAI - 5.2)

Rating:79Outperform

Price Target:

$488.00

▲(10.61% Upside)

The score is driven primarily by strong financial performance (growth, margin expansion, and robust free cash flow) and supportive earnings-call outlook (record backlog and confident 2026 guidance). Technicals reinforce the uptrend but look somewhat extended, while valuation is a notable constraint given the higher P/E and modest yield.

Positive Factors

Free Cash Flow Strength

Consistent high free cash flow (~$2.8B in 2024–2025) and operating cash flow (~$3.1–$3.2B) with ~106% conversion since 2020 underpin durable capital flexibility. This funds capex, disciplined buybacks, targeted M&A and dividends, reducing reliance on external financing over time.

Record Backlog & Commercial Momentum

A record $7.8B backlog and exceptional applied solutions momentum (book-to-bill 200%, applied bookings +120%) provide multimonth visibility into revenue. Durable commercial HVAC strength (Americas/EMEA bookings up mid-teens to >35%) supports sustainable top-line growth and services attach rates.

Margin Expansion & Multi-year Revenue Growth

Multi-year revenue CAGR and steady margin expansion (gross and net) reflect improved pricing, mix and cost control, yielding higher incremental profitability. Structural margin gains increase leverage on organic growth and support resilient earnings power despite cyclical end markets.

Negative Factors

Residential Market Weakness

Deep residential trough and inventory normalization (factory days cut ~1/3) drove meaningful deleverage (~60% in residential), reducing near-term margins and revenue. Prolonged consumer/channel weakness could limit recovery, pressuring segment contribution and short‑to‑medium term cash flow.

China / Asia Pacific Softness

Sustained China and APAC declines represent a structural regional risk for global growth diversification. Double‑digit softness in China and margin erosion in the region can materially reduce aggregate growth and require sustained investment to regain share, pressuring returns.

Margin Pressure from M&A & Integration

Lower‑margin acquisitions and integration costs (EMEA margin down ~160bps in Q4) will depress reported incremental margins and reduce near‑term operating leverage. This dilutes the earnings quality of growth and can slow the pace at which M&A enhances ROIC and free cash flow.

Trane Technologies (TT) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$97.83B

Dividend Yield0.95%

Average Volume (3M)1.65M

Price to Earnings (P/E)33.5

Beta (1Y)1.16

Revenue Growth8.58%

EPS Growth20.37%

CountryUS

Employees45,000

SectorIndustrials

Sector Strength72

IndustryConstruction

Share Statistics

EPS (TTM)2.86

Shares Outstanding221,739,000

10 Day Avg. Volume2,311,719

30 Day Avg. Volume1,651,349

Financial Highlights & Ratios

PEG Ratio2.07

Price to Book (P/B)10.12

Price to Sales (P/S)4.08

P/FCF Ratio30.95

Enterprise Value/Market Cap1.02

Enterprise Value/Revenue4.67

Enterprise Value/Gross Profit12.91

Enterprise Value/Ebitda23.25

Forecast

1Y Price Target

$480.38

Price Target Upside8.88% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering14

EPS Forecast (FY)14.81

Revenue Forecast (FY)$23.20B

Trane Technologies Business Overview & Revenue Model

Company DescriptionTrane Technologies plc, together with its subsidiaries, engages in the designing, manufacturing, selling, and servicing of solutions for heating, ventilation, air conditioning, and transport refrigeration. It 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 assessments and related 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. The company 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, electric-powered trailer and truck, hybrid-powered trailer, 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. It markets and sells its products under the Trane and Thermo King 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.

How the Company Makes MoneyTrane Technologies generates revenue through the sale of its HVAC and refrigeration systems, parts, and services, which are offered to a wide range of customers including residential homeowners, commercial businesses, and industrial clients. Key revenue streams include direct sales of equipment, maintenance and repair services, and energy efficiency solutions. The company also benefits from long-term service contracts that provide recurring revenue. Strategic partnerships with builders, contractors, and distributors enhance its market reach and sales capabilities. Additionally, Trane Technologies invests in innovation and sustainability initiatives, which not only align with market trends but also attract environmentally-conscious customers, further bolstering its earnings.

Trane Technologies Key Performance Indicators (KPIs)

Any

Revenue by Geography

Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.

Chart InsightsTrane Technologies' revenue growth in the Americas is robust, driven by a surge in Commercial HVAC bookings, which aligns with the company's strategic focus on innovation and backlog expansion. Despite challenges in the Residential and Transport segments, the Americas segment benefits from positive price realization. In EMEA, revenue growth is tempered by declining margins due to M&A integration costs. Meanwhile, APAC shows promising growth, supported by significant increases in Commercial HVAC bookings. Overall, the company's strategic initiatives and strong backlog position it well for continued growth, despite regional challenges.

Data provided by:

The Fly

Trane Technologies Earnings Call Summary

Earnings Call Date:Jan 29, 2026

(Q4-2025)

% Change Since: |

Next Earnings Date:May 06, 2026

Earnings Call Sentiment Positive

The call portrayed a solid, growth-oriented outlook driven by exceptional bookings, record backlog, strong services momentum, robust free cash flow, disciplined capital allocation, and confident 2026 guidance. These positives were balanced against near-term headwinds: residential weakness and intentional production cuts (causing Q4 deleverage), China/Asia softness, margin pressure from M&A and investments, and tariff/input-cost inflation. Management presented clear actions (inventory normalization, hedging, targeted M&A like Stellar Energy) and expects the commercial backlog and applied solutions strength to drive acceleration through 2026.

Q4-2025 Updates

Positive Updates

Record Bookings and Backlog

Enterprise organic bookings increased 22% in Q4, driving a record backlog of $7.8 billion. Commercial HVAC backlog rose ~25% in The Americas and nearly 40% in EMEA versus year-end 2024.

Exceptional Commercial HVAC and Applied Solutions Momentum

America's commercial HVAC bookings were up >35% year-over-year; Applied solutions bookings rose >120% with a record book-to-bill of 200%, marking the second consecutive quarter of >100% applied bookings growth.

Top-Line and EPS Growth

Q4 organic revenue grew 4% (7% excluding residential). The company delivered 10% adjusted EPS growth in Q4 and exceeded full-year adjusted EPS guidance for 2025.

Strong Services Performance and Durable Growth Engine

Services represent about one-third of enterprise revenue and have delivered a low-teens CAGR since 2020, contributing consistent, higher-margin recurring revenue and long services tails on applied projects.

Robust Free Cash Flow and Capital Allocation

Free cash flow remained robust with historical free cash flow conversion of ~106% (since 2020). In 2025 the company deployed/committed ~$3.2 billion (≈$840M dividends, ~$720M M&A, ~$1.5B share repurchases) and expects to deploy $2.8–$3.3B in 2026 with $4.7B remaining repurchase authorization.

Long-Term Financial Track Record (Since 2020)

Since 2020: revenue CAGR of 11%, adjusted EPS CAGR of 24%, adjusted EBITDA margin expansion of ~470 basis points, and >$15 billion deployed through the company’s capital allocation strategy.

Confident 2026 Guidance

Initial 2026 guidance: 6%–7% organic revenue growth, adjusted EPS $14.65–$14.85 (≈12%–14% growth), reported revenue growth 8.5%–9.5% (including ~50 bps FX and ~200 bps M&A). Targeting organic incremental leverage ≥25% and free cash flow conversion ≥100%.

Strategic M&A to Enhance Capabilities

Announced acquisition of Stellar Energy (modular data center cooling) expected to close in Q1 2026 and deliver modest EPS accretion in 2026 after integration costs; M&A expected to contribute ~200 bps to reported growth in 2026.

Commercial Outperformance vs End Markets

Commercial HVAC and services outperformed several end markets: Americas transport refrigeration revenues and bookings declined less than broader transport market declines (>20%), and EMEA commercial HVAC delivered mid- to high-teens bookings growth.

Negative Updates

Residential Market Weakness and Deleverage

Residential bookings were up mid-single digits but residential revenues declined mid-teens in Q4 due to channel inventory normalization. Management reduced factory production days by one-third in Q4 to right-size inventory, causing roughly 60% deleverage in the residential business. Q1 2026 residential is expected to be the trough (~down 20% vs Q1 2025) and the full-year residential outlook is flat to down up to 5%.

China and Asia Pacific Challenges

Asia Pacific organic revenue declined 6% in Q4, with China facing double-digit declines in both bookings and revenue. Asia Pacific adjusted EBITDA margin declined ~20 basis points as the team managed costs while continuing to invest.

Margin Pressure from Investments, M&A and Integration

EMEA adjusted EBITDA margin declined ~160 basis points in Q4 due to year-one acquisition and integration costs; channel investments and M&A in 2025 weighed on near-term margins across regions.

Tariffs and Input-Cost Headwinds

Tariff-related costs were ~ $140 million in 2025; management expects incremental tariff-related inflation (~$50M range) rolling into 2026 after mitigation. Commodity volatility (copper, aluminum, steel) requires active hedging and dynamic pricing management.

Transport Refrigeration Softness

Americas transport refrigeration bookings were down mid-single digits and revenues down low single digits, with broader transport markets down >20%. ACT forecasts trailers down ~7% in 2026, with recovery expected late 2026 into 2027.

Reported Incremental Margin Drag from Recent Acquisitions

Management noted that reported incremental margins will look ~700 basis points lower than organic incrementals in 2026 due to lower-margin M&A coming into the year and year-one integration costs.

Company Guidance

Management initiated 2026 guidance calling for 6–7% organic revenue growth and adjusted EPS of $14.65–$14.85 (roughly +12–14%), with ~50 bps of tailwind from FX and ~200 bps from M&A, implying reported revenue growth of 8.5–9.5%; reported incrementals are expected to be ~700 bps lower than organic due to lower‑margin M&A. They are targeting organic operating leverage of ≥25% and free cash flow conversion ≥100%, expect Q1 organic revenue to be roughly flat with Q1 adjusted EPS ≈ $2.50 (Q1 has averaged just under 17% of FY EPS historically), and see residential troughing in Q1 (residential down ~20% Q1, full‑year resi flat to down up to ~5%). Regionally, Americas commercial HVAC is expected to accelerate from ~7–8% in Q1 to ~10% in Q2 and low‑teens in H2 (roughly +10% for the year), supported by a record backlog of $7.8B (commercial HVAC backlog up ~25% Americas, ~40% EMEA) and consecutive quarters of >100% applied bookings; planned capital deployment for 2026 is $2.8–$3.3B (after ~$3.2B deployed/committed in 2025) with $4.7B remaining under the share repurchase authorization.

Trane Technologies Financial Statement Overview

Summary

Strong multi-year revenue growth (2021–2025) with clear margin expansion (gross, EBIT, and net) and consistently robust free cash flow (~$2.8B in 2024–2025). Balance sheet is generally solid with declining debt and rising equity, though missing 2025 leverage/return metrics slightly reduce latest-period visibility.

Income Statement

Very Positive

Revenue has grown strongly from 2021–2025 (annual revenue rising from ~$14.1B to ~$21.3B), with profitability improving alongside it. Margins expanded over time, with gross margin moving from ~31.6% (2021) to ~36.2% (2025) and net margin from ~10.1% to ~13.7%, indicating better pricing, mix, and/or cost control. EBIT margin also improved to ~18.5% in 2025. A key watch-out is the sharp revenue drop in 2020 (negative growth), showing some cyclicality risk, though performance since then has been consistently positive.

Balance Sheet

Positive

Leverage looks manageable and improving, with total debt declining to ~$4.6B in 2025 from ~$5.4B in 2024, while equity increased to ~$8.6B (up from ~$6.3B in 2021), supporting a stronger capital base. Total assets also grew to ~$21.4B in 2025. Debt-to-equity and return-on-equity are not available for 2025 in the provided data, which limits a clean year-to-year leverage and shareholder-return comparison at the most recent point; however, prior years showed moderate leverage (debt-to-equity ~0.68–0.82 in 2020–2024) and strong shareholder returns (return on equity ~23%–34% in 2021–2024).

Cash Flow

Very Positive

Cash generation is a major strength: operating cash flow remained high and stable (about ~$3.1–$3.2B in 2024–2025), and free cash flow was robust at ~$2.8B in both 2024 and 2025. Free cash flow growth is strong in 2025 (as provided), and free cash flow in 2021–2024 consistently covered a large portion of net income (about ~81%–90%), indicating good earnings quality and cash conversion. Some cash-flow volatility appears earlier (notably 2022 free cash flow decline), and 2025 coverage ratios are not available in the provided data, but overall cash flow trends are solid.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	21.32B	19.84B	17.68B	15.99B	14.14B
Gross Profit	7.71B	7.08B	5.86B	4.96B	4.47B
EBITDA	4.17B	3.86B	3.15B	2.72B	2.32B
Net Income	2.92B	2.57B	2.02B	1.76B	1.42B
Balance Sheet
Total Assets	21.42B	20.15B	19.39B	18.08B	18.06B
Cash, Cash Equivalents and Short-Term Investments	1.76B	1.59B	1.10B	1.22B	2.16B
Total Debt	4.62B	5.38B	4.78B	4.84B	4.84B
Total Liabilities	12.82B	12.66B	12.37B	11.98B	11.79B
Stockholders Equity	8.60B	7.46B	7.00B	6.11B	6.27B
Cash Flow
Free Cash Flow	2.81B	2.77B	2.09B	1.21B	1.37B
Operating Cash Flow	3.19B	3.15B	2.39B	1.50B	1.59B
Investing Cash Flow	-640.00M	-562.90M	-1.17B	-540.40M	-545.70M
Financing Cash Flow	-2.50B	-2.02B	-1.35B	-1.85B	-2.13B

Trane Technologies Technical Analysis

Technical Analysis Sentiment

Positive

Last Price441.20

Price Trends

50DMA

398.50

Positive

100DMA

408.33

Positive

200DMA

413.92

Positive

Market Momentum

MACD

9.67

Negative

RSI

73.13

Negative

STOCH

92.96

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TT, the sentiment is Positive. The current price of 441.2 is above the 20-day moving average (MA) of 398.18, above the 50-day MA of 398.50, and above the 200-day MA of 413.92, indicating a bullish trend. The MACD of 9.67 indicates Negative momentum. The RSI at 73.13 is Negative, neither overbought nor oversold. The STOCH value of 92.96 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TT.

Trane Technologies Risk Analysis

Trane Technologies disclosed 31 risk factors in its most recent earnings report. Trane Technologies reported the most risks in the "Legal & Regulatory" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Trane Technologies Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TT	79 Outperform	$97.83B	33.55	36.81%	0.95%	8.58%	20.37%
CSL	77 Outperform	$16.52B	20.79	34.79%	1.28%	0.14%	3.88%
JCI	69 Neutral	$79.26B	23.33	13.15%	1.27%	-10.19%	100.65%
CARR	69 Neutral	$53.52B	24.56	9.44%	1.65%	-7.93%	-35.00%
LII	67 Neutral	$18.75B	22.31	78.10%	0.96%	3.77%	12.46%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
AAON	61 Neutral	$7.77B	77.51	12.08%	0.53%	8.77%	-47.50%

* Industrials Sector Average

Performance Comparison

Trane Technologies

441.20

86.90

24.53%

AAON

Aaon

95.24

-18.29

-16.11%

CSL

Carlisle Companies

395.36

50.04

14.49%

JCI

Johnson Controls

129.49

42.81

49.39%

LII

Lennox International

534.53

-46.80

-8.05%

CARR

Carrier Global

63.55

-0.73

-1.14%

Trane Technologies Corporate Events

Business Operations and StrategyM&A Transactions

Trane Technologies Acquires Stellar Energy Digital Business

Positive

Dec 2, 2025

On December 2, 2025, Trane Technologies plc announced a definitive agreement to acquire the Stellar Energy Digital business from Stellar Energy International, Ltd. This acquisition is expected to enhance Trane Technologies’ capabilities in digital energy solutions, potentially strengthening its position in the industry and offering new opportunities for growth.

The most recent analyst rating on (TT) stock is a Hold with a $434.00 price target. To see the full list of analyst forecasts on Trane Technologies stock, see the TT Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jan 30, 2026