Trane Technologies plc (TT) stock analysis

P/E below its 5-year median

Trane Technologies's P/E of 30.0 is below its own 5-year median of 32.0.

P/E below the industry

Trane Technologies's P/E of 30.0 is below the Laboratory Apparatus and Analytical, Optical, Measuring, and Controlling Instruments median of 36.5.

EV/EBITDA below its 5-year median

Trane Technologies's EV/EBITDA of 21.3 is below its 5-year median of 22.2.

P/B above the industry

Trane Technologies's price-to-book of 10.21 is above the Laboratory Apparatus and Analytical, Optical, Measuring, and Controlling Instruments median of 3.17.

Trading below fair value

The share price of $424.84 is below our fair value estimate of $473.33.

Margin of safety under 20%

The price is 10.2% below fair value, less than the 20% cushion we look for.

Revenue growing 10%+ a year

Revenue grew 10.1% a year over the last three fiscal years.

EPS growing 10%+ a year

Diluted EPS grew 20.2% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 7.5% over the last twelve months, against a 5-year average of 27.8% a year.

Growing faster than the industry

Revenue grew 10.3% over the last twelve months; the Laboratory Apparatus and Analytical, Optical, Measuring, and Controlling Instruments median is 8.4%.

Guidance raised

Trane Technologies raised its full-year 2026 organic revenue growth outlook on Jul 30, 2026.

Gross margin trend

This company does not report gross profit.

Return on equity over 15%

Return on equity was 36.1% over the last twelve months and averaged 30.8% over five years.

Return on capital over 10%

Return on invested capital was 25.0%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Trane Technologies's return on equity of 36.1% is above the Laboratory Apparatus and Analytical, Optical, Measuring, and Controlling Instruments median of 1.1%.

Earnings grew over 5 years

Net income grew 27.8% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 13.6% over the last twelve months, against a 5-year average of 11.8%.

Net margin above the industry

Trane Technologies's net margin of 13.6% is above the Laboratory Apparatus and Analytical, Optical, Measuring, and Controlling Instruments median of -1.3%.

High debt

Debt is 46.3% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 82.3% five years ago to 46.3%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 99.3% of total debt.

Interest well covered

Operating income covers interest expense 19.2 times.

Short-term assets cover short-term debts

Current assets are 1.12 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 6.02; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Trane Technologies paid dividends worth 0.7% of the share price over the last twelve months.

Yield below Treasuries

The 0.7% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Trane Technologies yields 0.7%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 28.6% of net income.

Covered by free cash flow

Dividends take 23.6% of free cash flow.