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Trane Technologies (TT)
NYSE:TT
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Trane Technologies
(NYSE:TT)
Select Model
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Rating:73Outperform
Price Target:
$463.00
â–²(8.84% Upside)
Trane Technologies' strong financial performance and positive earnings call sentiment are significant strengths, contributing to a solid overall score. However, technical indicators suggest potential bearish momentum, and the high P/E ratio indicates valuation concerns. The company should address free cash flow growth to sustain its positive trajectory.
Positive Factors
Revenue Growth
Strong revenue growth and record bookings in Q2 indicate robust demand and effective market penetration, supporting long-term business expansion.
Americas Commercial HVAC Performance
Exceptional performance in the Americas Commercial HVAC segment highlights competitive strength and market leadership, driving sustained revenue growth.
Strong Services Business
Consistent growth in the services segment ensures recurring revenue, enhancing financial stability and supporting long-term profitability.
Negative Factors
Residential HVAC Revenue Decline
Challenges in the residential HVAC segment due to supply shortages could impact revenue and margin stability, requiring strategic adjustments.
EMEA Margin Decline
Margin declines in EMEA, despite revenue growth, suggest operational inefficiencies or increased costs, which may affect profitability.
Asia Pacific Revenue Decline
Revenue and margin declines in Asia Pacific indicate regional challenges that could hinder growth and require strategic focus to address.
Trane Technologies (TT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$92.21B
Dividend Yield0.87%
Average Volume (3M)1.30M
Price to Earnings (P/E)32.9
Beta (1Y)1.33
Revenue Growth10.20%
EPS Growth24.57%
CountryUS
Employees45,000
SectorIndustrials
Sector Strength72
IndustryConstruction
Share Statistics
EPS (TTM)3.88
Shares Outstanding222,515,370
10 Day Avg. Volume1,410,108
30 Day Avg. Volume1,298,262
Financial Highlights & Ratios
PEG Ratio1.14
Price to Book (P/B)11.12
Price to Sales (P/S)4.18
P/FCF Ratio29.88
Enterprise Value/Market Cap1.11
Enterprise Value/Revenue4.93
Enterprise Value/Gross Profit13.60
Enterprise Value/Ebitda24.41
Forecast
1Y Price Target
$473.46Price Target Upside11.29% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
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 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
Highlights profitability across different regions, revealing where the company is most efficient and where it may face challenges or opportunities for margin improvement.
Highlights profitability across different regions, revealing where the company is most efficient and where it may face challenges or opportunities for margin improvement.
Data provided by:
Main Street Data
Main Street DataTrane 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 strong financial performance with consistent revenue growth and solid profitability margins. The balance sheet is stable with a favorable debt-to-equity ratio and high return on equity. However, the decline in free cash flow growth is a concern that needs addressing.Income Statement
Trane Technologies has demonstrated strong revenue growth with a consistent upward trajectory over the past few years, highlighted by a TTM revenue growth rate of 2.16%. The company maintains healthy profitability margins, with a gross profit margin of 36.26% and a net profit margin of 13.76% in the TTM period. EBIT and EBITDA margins are also robust, indicating efficient operational management. These factors contribute to a strong income statement performance.85
Very Positive
Balance Sheet
The balance sheet reflects a stable financial position with a manageable debt-to-equity ratio of 0.59 in the TTM period, showing improvement from previous years. Return on equity is impressive at 37.61%, indicating effective use of equity to generate profits. The equity ratio stands at a healthy level, suggesting a solid capital structure. However, the company should continue monitoring its debt levels to maintain financial flexibility.78
Positive
Cash Flow
Trane Technologies' cash flow statement shows a mixed performance. While the operating cash flow to net income ratio is moderate at 0.48, indicating decent cash generation relative to net income, the free cash flow growth rate has declined by 62.4% in the TTM period. The free cash flow to net income ratio remains strong at 0.87, suggesting efficient cash conversion. The company should focus on improving free cash flow growth to enhance overall cash flow health.72
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 20.75B | 19.84B | 17.68B | 15.99B | 14.14B | 12.45B |
| Gross Profit | 7.52B | 7.08B | 5.86B | 4.96B | 4.47B | 3.80B |
| EBITDA | 4.19B | 3.86B | 3.15B | 2.72B | 2.32B | 1.83B |
| Net Income | 2.86B | 2.57B | 2.02B | 1.76B | 1.42B | 854.90M |
Balance Sheet | ||||||
| Total Assets | 20.99B | 20.15B | 19.39B | 18.08B | 18.06B | 18.16B |
| Cash, Cash Equivalents and Short-Term Investments | 774.20M | 1.59B | 1.10B | 1.22B | 2.16B | 3.29B |
| Total Debt | 4.62B | 4.77B | 4.78B | 4.84B | 4.84B | 5.27B |
| Total Liabilities | 13.14B | 12.66B | 12.37B | 11.98B | 11.79B | 11.73B |
| Stockholders Equity | 7.83B | 7.46B | 7.00B | 6.11B | 6.27B | 6.43B |
Cash Flow | ||||||
| Free Cash Flow | 2.81B | 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 | -422.30M | -562.90M | -1.17B | -540.40M | -545.70M | -376.20M |
| Financing Cash Flow | -3.00B | -2.02B | -1.35B | -1.85B | -2.13B | 884.30M |
Trane Technologies Technical Analysis
Positive
425.41
Price Trends
423.43
Positive
425.99
Negative
392.85
Positive
Market Momentum
-0.83
Negative
60.85
Neutral
88.70
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 425.41 is above the 20-day moving average (MA) of 409.70, above the 50-day MA of 423.43, and above the 200-day MA of 392.85, indicating a bullish trend. The MACD of -0.83 indicates Negative momentum. The RSI at 60.85 is Neutral, neither overbought nor oversold. The STOCH value of 88.70 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $92.21B | 32.88 | 38.89% | 0.87% | 10.20% | 24.57% | |
73 Outperform | $18.86B | 22.63 | 92.68% | 0.91% | 7.92% | 29.72% | |
71 Outperform | $71.26B | 32.66 | 14.09% | 1.39% | -13.10% | 40.62% | |
68 Neutral | $50.60B | 23.82 | 27.32% | 1.45% | -5.24% | -33.37% | |
66 Neutral | $7.82B | 63.70 | 14.66% | 0.40% | 5.39% | -34.28% | |
66 Neutral | $14.17B | 18.28 | 38.02% | 1.24% | 1.37% | 5.96% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
TT
Trane Technologies
425.41
42.04
10.97%
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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.