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Ingersoll Rand (IR) Stock May Be 14% Below Fair Value

Simply Wall St · 1d ago

Ingersoll Rand has delivered a solid long term share price gain, yet the recent pullback has many holders asking whether the current US$76.22 price is still supported by the cash the business can generate. The question now is how that track record lines up against what the company’s future cash flows may justify.

  • Over the past 5 years, Ingersoll Rand has returned 49.1%, which puts real weight on whether the underlying cash flows can sustain that kind of value creation.
  • The group’s focus on industrial equipment and solutions means long asset lives and often recurring service income. This can support more predictable cash generation and influences what investors may be willing to pay today.
  • Prefer to judge Ingersoll Rand on earnings? See why Ingersoll Rand's 30.8x P/E tells a different valuation story.

The issue now is whether the stock’s current market value is in line with what its cash flows imply when assessed using a Discounted Cash Flow model.

If you are questioning whether Ingersoll Rand's US$76.22 price fairly reflects its cash flows, it can help to compare that valuation lens across 30 high quality undervalued stocks.

Does Ingersoll Rand Look Undervalued on Cash Flow?

The Discounted Cash Flow (DCF) approach values Ingersoll Rand on the cash it can return to shareholders over time, adjusted back to today’s dollars. Latest twelve month free cash flow sits at about $1.2b, and the model assumes this cash generation continues to grow rather than shrink, with projected free cash flow increasing from current levels over the coming decade.

Those projections, combined with a two stage Free Cash Flow to Equity framework, result in an estimated intrinsic value that the DCF places modestly above the current US$76.22 share price. For an investor, the key question is whether the growth implied in those future cash flows feels reasonable for Ingersoll Rand given its industrial focus and recurring service income, or whether the market is assigning a discount because it is more cautious on how dependable that trajectory is. Find out what Ingersoll Rand could be worth using our Discounted Cash Flow (DCF) estimate.

The Ingersoll Rand Narrative: What Would Justify Today's Price?

Narratives on Simply Wall St extend the Ingersoll Rand valuation puzzle by spelling out which paths for future growth, margins and earnings would need to hold for the stock to merit a meaningfully higher or lower price than today. Each one frames Ingersoll Rand's implied fair value as a thesis you can track over time so you can see how the story changes as new information comes through.

One of the top community narratives on Ingersoll Rand: 21% undervalued

"The company continues building recurring, high-margin revenue streams through expansion of aftermarket services and value-added lifecycle solutions..."

Discover why this Narrative puts Ingersoll Rand at 21% undervalued.

For Ingersoll Rand, who is steering the ship matters as much as what it is worth

Price and cash flows only tell part of the story for Ingersoll Rand, because the people making the decisions and the way their pay is structured can heavily shape what happens next. See who runs Ingersoll Rand and how they are paid.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.