Trane Technologies (TT) AI Stock Analysis

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Trane Technologies

(NYSE:TT)

Rating:71Outperform

Price Target:

$459.00

▲(10.92% Upside)

Trane Technologies' overall stock score reflects strong financial performance and positive earnings call sentiment, which are the most significant factors. However, technical analysis indicates bearish momentum, and the valuation suggests the stock may be overvalued, which tempers the overall score.

Positive Factors

Analyst Rating

Analyst upgrades the rating from equal-weight to overweight based on the belief that Trane Technologies is headed toward top-tier compounder status, valued with a quality-growth premium.

Growth Potential

Trane has been upgraded to a Buy, with a DCF-derived target price of USD415, indicating confidence in its long-term growth potential.

Market Performance

Following earnings, Trane Technologies was rallying intraday, remaining an outperformer and ending up approximately 8% at the close.

Negative Factors

Market Demand

Negative catalysts could include weakening CHVAC demand, continued deterioration in the China business, and/or evidence of tariff-related uncertainty.

Tariff Uncertainty

Uncertainties in the tariff landscape and concerns about consumer and economic growth create an uncertain outlook for US industrial stocks.

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

Market Cap

$91.93B

Dividend Yield0.88%

Average Volume (3M)1.29M

Price to Earnings (P/E)32.8

Beta (1Y)1.32

Revenue Growth10.20%

EPS Growth24.57%

CountryUS

Employees45,000

SectorIndustrials

Sector Strength73

IndustryConstruction

Share Statistics

EPS (TTM)3.88

Shares Outstanding222,515,370

10 Day Avg. Volume1,275,777

30 Day Avg. Volume1,289,702

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.11

Enterprise Value/Revenue5.04

Enterprise Value/Gross Profit14.02

Enterprise Value/Ebitda25.19

Forecast

1Y Price Target

$474.31

Price Target Upside14.61% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering17

Trane Technologies Business Overview & Revenue Model

Company DescriptionTrane Technologies (TT) is a global climate innovator that provides sustainable solutions to enhance the quality and comfort of indoor environments. The company operates primarily in the HVAC (heating, ventilation, and air conditioning) sector, offering a wide range of products including heating and cooling systems, building management systems, and energy-efficient technologies. Trane Technologies serves a diverse clientele, including residential, commercial, and industrial sectors, focusing on energy efficiency and reducing carbon footprints.

How the Company Makes MoneyTrane Technologies generates revenue through the sale of its HVAC systems, services, and solutions. The company has a robust revenue model that includes multiple key streams: product sales from heating and cooling systems, installation and maintenance services, and energy management solutions. A significant portion of its earnings comes from recurring service contracts that provide ongoing maintenance and support for installed systems. Additionally, Trane Technologies benefits from partnerships with contractors, distributors, and builders, which help expand its market reach. The company's commitment to sustainability also attracts clients looking to reduce energy costs and comply with environmental regulations, further contributing to its revenue growth.

Trane Technologies Key Performance Indicators (KPIs)

Any

Adjusted EBITDA by Geography

Adjusted EBITDA by Geography
Highlights profitability across different regions, revealing where the company is most efficient and where it may face challenges or opportunities for margin improvement.

Chart InsightsTrane Technologies is experiencing strong growth in the Americas, with Adjusted EBITDA reaching new highs, driven by robust performance in the Commercial HVAC segment. However, EMEA and APAC regions face margin pressures due to challenging market conditions, particularly in China. Despite these challenges, the company has raised its full-year revenue and EPS guidance, reflecting confidence in its strategic initiatives and strong backlog. Investors should note the potential risks in residential HVAC and transport refrigeration sectors, which could impact future performance.

Data provided by:

Main Street Data

Trane Technologies Earnings Call Summary

Earnings Call Date:Jul 30, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Oct 29, 2025

Earnings Call Sentiment Positive

The earnings call reflected strong performance in the Americas Commercial HVAC segment and a robust services business, leading to raised full-year guidance. However, challenges in the residential HVAC segment due to refrigerant shortages and margin declines in EMEA and Asia Pacific were noted. Despite these challenges, the overall sentiment is positive due to the strong performance in key areas and strategic investments for future growth.

Q2-2025 Updates

Positive Updates

Record Bookings and Revenue Growth

Q2 was marked by record bookings and revenues, with a 90 basis point expansion in adjusted operating margins and 18% growth in adjusted EPS. Enterprise and Americas Commercial HVAC organic bookings reached new all-time highs with increases of 4% and over 20%, respectively.

Americas Commercial HVAC Performance

Americas Commercial HVAC bookings surpassed the previous record by nearly $300 million, with growth of over 20%. Revenue growth was exceptional, increasing by mid-teens on top of a mid-20s growth comp in the prior year.

Strong Services Business

The services business delivered impressive organic revenue growth, up in the low teens, and has maintained a low teens compound annual growth rate since the inception of Trane Technologies in 2020.

Raised Full-Year Guidance

The company raised its full-year revenue guidance to approximately 8% organic growth and adjusted EPS to approximately $13.05, up 16% year-over-year.

Capital Allocation

$1.5 billion deployed through a balanced capital allocation strategy, including $420 million to dividends, approximately $15 million to M&A, $900 million to share repurchases, and $150 million for debt retirement.

Negative Updates

Residential HVAC Revenue Decline

Residential HVAC revenues fell short due to a near-term industry shortage of R-454B refrigerant cylinders. Revenues were down mid-single digits for the quarter.

EMEA Margin Decline

EMEA revenue growth was up 3%, but adjusted EBITDA margin declined by 200 basis points, consistent with expectations. Strategic investments in channel and M&A integrations impacted margins.

Asia Pacific Revenue Decline

Asia Pacific revenue declined by high single digits, and adjusted EBITDA margin contracted by 220 basis points, primarily due to lower volumes in China.

Company Guidance

In the Trane Technologies second quarter 2025 earnings call, the company announced a strong performance, particularly in its Americas Commercial HVAC segment, which saw a record increase in organic bookings by over 20% and a significant surge in orders for Applied Solutions by more than 60%. The company's services segment, representing a third of enterprise revenues, achieved low teens growth, maintaining a compound annual growth rate in the same range since 2020. Trane's backlog remained substantial at $7.1 billion, although there was a sequential decline due to expected backlog reductions in shorter-cycle businesses. The company raised its full-year organic revenue growth guidance to approximately 8% and increased its adjusted EPS forecast to around $13.05, driven by strong performance in commercial HVAC and despite challenges in the residential HVAC segment due to a shortage of R-454B refrigerant cylinders.

Trane Technologies Financial Statement Overview

Summary

Trane Technologies demonstrates robust financial health with strong revenue and profit growth, efficient operations, and strong cash flow generation. The company maintains a strong balance sheet, although it carries a moderate level of debt.

Income Statement

Very Positive

Trane Technologies shows strong performance with a consistent increase in revenue, evidenced by significant revenue growth from 2020 to the TTM period. Gross profit and net profit margins are healthy, with a gross profit margin of 35.97% and a net profit margin of 13.27% in the TTM. The company has maintained stable EBIT and EBITDA margins, demonstrating operational efficiency and profitability.

Balance Sheet

Positive

The company's balance sheet reflects a solid financial position with a reasonable debt-to-equity ratio of 0.49 and an equity ratio of 48.85% in the TTM. Return on equity is robust at 21.09%, indicating effective management of shareholder equity. However, some potential risks include the relatively high total debt, which could impact financial flexibility.

Cash Flow

Very Positive

Trane Technologies exhibits strong cash flow performance with a substantial free cash flow growth rate in the TTM. The operating cash flow to net income ratio is favorable at 1.56, suggesting efficient cash generation relative to net income. The free cash flow to net income ratio of 1.42 further supports the company's ability to generate cash beyond its earnings, highlighting operational strength.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	20.31B	19.84B	17.68B	15.99B	14.14B	12.45B
Gross Profit	7.30B	7.08B	5.86B	4.96B	4.47B	3.80B
EBITDA	4.06B	3.86B	3.15B	2.72B	2.32B	1.83B
Net Income	2.74B	2.57B	2.02B	1.76B	1.42B	854.90M
Balance Sheet
Total Assets	20.12B	20.15B	19.39B	18.08B	18.06B	18.16B
Cash, Cash Equivalents and Short-Term Investments	860.50M	1.59B	1.10B	1.22B	2.16B	3.29B
Total Debt	4.77B	4.77B	4.78B	4.84B	4.84B	5.27B
Total Liabilities	12.60B	12.66B	12.37B	11.98B	11.79B	11.73B
Stockholders Equity	7.49B	7.46B	7.00B	6.11B	6.27B	6.43B
Cash Flow
Free Cash Flow	2.83B	2.77B	2.09B	1.21B	1.37B	1.29B
Operating Cash Flow	3.23B	3.15B	2.39B	1.50B	1.59B	1.44B
Investing Cash Flow	-863.80M	-562.90M	-1.17B	-540.40M	-545.70M	-376.20M
Financing Cash Flow	-2.35B	-2.02B	-1.35B	-1.85B	-2.13B	884.30M

Trane Technologies Technical Analysis

Technical Analysis Sentiment

Negative

Last Price413.83

Price Trends

50DMA

433.12

Negative

100DMA

417.42

Negative

200DMA

392.73

Positive

Market Momentum

MACD

-6.11

Positive

RSI

40.74

Neutral

STOCH

30.65

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TT, the sentiment is Negative. The current price of 413.83 is below the 20-day moving average (MA) of 422.61, below the 50-day MA of 433.12, and above the 200-day MA of 392.73, indicating a neutral trend. The MACD of -6.11 indicates Positive momentum. The RSI at 40.74 is Neutral, neither overbought nor oversold. The STOCH value of 30.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LII	74 Outperform	$20.30B	24.72	112.94%	0.82%	7.92%	29.72%
CSL	72 Outperform	$16.94B	22.01	31.34%	1.03%	1.37%	5.96%
TT	71 Outperform	$91.93B	32.78	38.89%	0.88%	10.20%	24.57%
JCI	71 Outperform	$69.52B	31.55	12.52%	1.39%	-13.10%	40.62%
CARR	68 Neutral	$55.75B	26.14	10.79%	1.32%	-5.24%	-33.37%
AAON	66 Neutral	$6.62B	55.32	15.52%	0.47%	5.39%	-34.28%
Sector *	65 Neutral	$2.66B	14.67	12.46%	3.53%	2.94%	43.39%

* Industrials Sector Average

Performance Comparison

Trane Technologies

413.83

71.71

20.96%

AAON

Aaon

81.15

-7.08

-8.02%

CSL

Carlisle Companies

396.20

5.20

1.33%

JCI

Johnson Controls

106.23

38.83

57.61%

LII

Lennox International

578.05

27.53

5.00%

CARR

Carrier Global

65.51

-4.37

-6.25%

Trane Technologies Corporate Events

Executive/Board ChangesShareholder Meetings

Trane Technologies Shareholders Approve Key Governance Decisions

Positive

Jun 6, 2025

At the 2025 Annual General Meeting, Trane Technologies‘ shareholders elected twelve directors, approved executive compensation, and appointed PriceWaterhouseCoopers as independent auditors for the fiscal year ending December 31, 2025. Additionally, shareholders renewed the directors’ authority to issue shares and reallot treasury shares, indicating strong support for the company’s governance and strategic financial decisions.

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: Aug 30, 2025