Ingersoll Rand Inc. (IR): what the price requires
At today's price, Ingersoll Rand Inc. (IR) is priced for today's economics sustained for ~8.4 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/IR
Headline
| Field | Value |
|---|---|
| Ticker | IR |
| Company | Ingersoll Rand Inc. |
| Current price | $78.23/sh |
| Composition | Original equipment 64% / Aftermarket 36% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.8% |
| Operating margin today | 14.1% |
| Margin compression implied | -6.3pp |
| Must persist for | 8.4y |
| Multiple paid | 33x operating income |
The operating-margin requirement is derived from the framework's value band at year 10, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 10.2% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.9 years.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | -0.33σ |
| cohort percentile (of 225 peers) | 73 |
| sustained it ~8.4 years at this level | 18% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 6.36x | 5 | expensive |
| Earnings | 2.54x | 4 | expensive |
| Relative | 1.58x | 3 | expensive |
| Growth | 1.16x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $67.20 | 1.16x | yes | FCF base $1.2B, growth 7% (input: historical growth), terminal g 4.0%, WACC 9.2%, 5yr projection |
| DCF Exit Multiple | Growth | $77.78 | 1.01x | yes | Exit EV/EBITDA: 15.9x / 17.9x / 19.9x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $49.27 | 1.59x | yes | P/E 28.35x (blended: static sector reference 18x + trailing (TTM) 53x), scenarios: 23.8x / 28.4x / 32.9x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $16.11 | 4.86x | yes | BV/sh $25.83, ROE (TTM) 5.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $12.30 | 6.36x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $63.10 | 1.24x | yes | Rev $7.8B, growth 7% (input: historical growth; tapered), Terminal P/S: 3.3x / 4.0x / 4.6x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $28.60 | 2.74x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.10B × (1−16%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $11.82 | 6.62x | yes | BV $25.83 + 5yr PV of (ROE (TTM) 5.8% − Kₑ 9.3%) × BV; BV grows 3.7%/yr |
| Graham Number | Asset | $29.33 | 2.67x | yes | √(22.5 × EPS $1.48 × BVPS $25.83) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $53.46 | 1.46x | yes | EBITDA $1.65B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $34.92 | 2.24x | yes | FCF $1160.8M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $33.42 | 2.34x | yes | SBC-adj FCF $1.11B (FCF $1.16B − SBC $0.05B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $1.24 | 63.09x | yes | EPS $1.48 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $7.61 | 10.28x | yes | BV $25.83 × (ROIC 2.7% / WACC 9.2%) |
| P/Sales Sector | Relative | $49.37 | 1.58x | yes | Revenue $7.78B × sector P/S 2.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $16.00 | 4.89x | yes | EPS $1.48 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $3.5b |
| Net debt / NOPAT (after-tax) | 3.98x |
| Net debt / operating income (pre-tax) | 3.36x |
| Interest coverage | 4.1x |
| Share count CAGR (buyback) | -1.2% |
| Burning cash | no |
Bullet Takeaways
- Ingersoll Rand makes air compressors, pumps, and gas-handling equipment, but the more important fact is that aftermarket parts and service make up 36.5% of revenue, recurring income that follows the installed base.
- The company grows mostly by acquisition: in the most recent quarter M&A added 3.7% to revenue while organic revenue dipped slightly, and management cited 10 deals at letter-of-intent stage and over 200 in the funnel.
- The price is reached only by the forward-growth method, so a buyer is paying a durability premium that rests on the acquisition machine and the recurring aftermarket continuing to compound.
Bull Case
The counterintuitive thing about Ingersoll Rand is that an industrial company selling compressors and pumps earns more than a third of its revenue from a quietly recurring stream, not from selling new machines. Aftermarket parts, consumables, and service represented 36.5% of total revenue in 2025. That changes what kind of business this is. A compressor runs continuously in a factory and needs parts, filters, and servicing for its whole life, so every machine sold plants an annuity. The installed base is the asset, and the recurring revenue it generates is stickier and higher-margin than the equipment sale that started it. That is why the company sustains an adjusted EBITDA margin above 25%, unusual for industrial machinery.
The growth model is a disciplined acquisition machine layered on top. Ingersoll Rand runs a deliberate strategy of buying small, niche flow-and-compression businesses and folding them into its operating system, and the pipeline is deep: management cited 10 transactions at letter-of-intent stage and more than 200 companies in its funnel. In the most recent quarter, acquisitions contributed 3.7% to revenue, and the company's diversified end markets span "life sciences, food and beverage production, clean energy, industrial manufacturing, infrastructure, water and wastewater treatment", so no single industry dictates results. Bolt-on M&A funded by strong cash flow, integrated into a high-margin recurring-revenue platform, is a compounding flywheel when executed well.
The execution is steady and the balance sheet supports more of the same. First-quarter revenue rose 8% to $1.85 billion with adjusted EPS up 7%, beating estimates, and the company reaffirmed full-year guidance. Net debt sits at a manageable roughly 3 times operating income with interest coverage above 4 times, and the share count has been edging down. That gives the company room to keep acquiring without straining its credit. The bull case is the flywheel: recurring aftermarket cash funding a relentless bolt-on program that adds more installed base and more recurring revenue.
Bear Case
The sector-cycle observation is the bear's starting point: industrial equipment demand follows the manufacturing and capital-spending cycle, and right now Ingersoll Rand's organic engine is barely moving. Organic revenue actually slipped 0.3% in the most recent quarter, with essentially all the growth coming from acquisitions and favorable currency. Full-year guidance calls for roughly 1% organic growth at the midpoint. Strip out M&A and currency, and the underlying business is treading water, which is what a soft point in the industrial cycle looks like. New-equipment orders are sensitive to customers' willingness to invest in capacity, and that willingness contracts when the economy slows.
That puts heavy weight on the acquisition machine, which carries its own risks. A company that grows mainly by buying others is only as good as the prices it pays and the integrations it executes. As the pipeline gets picked over and competition for quality assets rises, the returns on incremental deals can fade, and a single overpriced or poorly integrated acquisition can dent the flywheel's reputation for discipline. The strategy also requires continuous deployment of capital and, over time, can build up goodwill that becomes vulnerable in a downturn. The bull's flywheel is the bear's dependency: take away the M&A and the organic business is flat.
The valuation makes the cycle risk acute. The price is reached only by the forward-growth method; the asset-based, earnings-power, and peer-multiple lenses all say the stock is richly valued. That is a durability premium, and it rests on the assumption that the recurring aftermarket plus the acquisition cadence compound through the cycle. If the industrial cycle weakens further and organic growth stays negative while M&A returns compress, the static methods offer no floor, and a stock priced for durable compounding has to defend a multiple the current organic numbers do not support. Leverage at roughly 3 times operating income is moderate, not alarming, so this is not a solvency bear. It is a cycle-and-multiple bear: a high-quality compounder priced as if the compounding is guaranteed, into an organic backdrop that is currently flat.
Valuation
Ingersoll Rand is valued as a durable industrial compounder, and the price reflects what the static methods cannot fully capture. The forward-growth method reaches the price; the asset-based, earnings-power, and peer-multiple lenses all say it is richly valued. Inverting the price gives a modest required forward growth, but the embedded assumption is really about durability: that the recurring aftermarket plus the bolt-on acquisition cadence compound steadily over a long horizon.
That split among the methods is the durability premium. The high-margin recurring revenue and the proven M&A flywheel are exactly the kind of moat the trailing-multiple and book-value methods structurally understate, which is why three of four families read the stock as expensive while the growth method alone reaches it. The premium holds if the flywheel keeps turning, the aftermarket compounds and the acquisition pipeline keeps adding installed base, and it is at risk if organic growth, currently flat, stays soft and M&A returns compress. Among industrial-machinery peers, Ingersoll Rand commands a premium on the quality of its recurring mix rather than on its current organic growth rate.
Solvency is moderate and supportive rather than constraining. Net debt sits around 3 times operating income with interest coverage above 4 times, and the share count has edged down, so the company has room to keep acquiring without straining its credit. The leverage is the normal cost of an M&A-driven model, not a fragility. The decisive variable is the durability the price is paying for: whether the recurring aftermarket and the acquisition machine keep compounding through an industrial cycle whose organic engine is, for now, running flat.
Catalysts
The most recent quarter, the first of 2026, beat estimates while the organic engine stalled. Revenue rose 8% year over year to $1.85 billion and adjusted EPS rose 7% to $0.77, both ahead of consensus, with adjusted EBITDA of $469 million at a 25.4% margin. The composition mattered: acquisitions added 3.7% to revenue and currency 4.2%, while organic revenue slipped 0.3%.
The acquisition pipeline is the live catalyst. Management cited 10 transactions at letter-of-intent stage and more than 200 companies in its funnel, with the Fox S.r.l. acquisition expected to close soon. The company reaffirmed full-year 2026 guidance of 2.5% to 4.5% revenue growth, with roughly 1% organic at the midpoint and 2% from M&A, and adjusted EPS of $3.45 to $3.57.
The forward watch items are organic order trends and deal flow. Because the guidance leans on acquisitions and currency rather than organic growth, the key signals are whether organic demand reaccelerates as the industrial cycle firms and whether the company keeps converting its pipeline into accretive deals at disciplined prices. Each quarter's organic number is the clearest test of whether the underlying business is recovering or still treading water.
Peer Cohorts (Per Segment, With Filing Citations)
Industrial Technologies and Services (reported)
- DOV (DOVER Corp)
- (no filing in the citation store)
- GGG (GRACO INC.)
- (no filing in the citation store)
- IEX (IDEX CORP)
- (no filing in the citation store)
- ITT (ITT INC.)
- (no filing in the citation store)
- FELE (FRANKLIN ELECTRIC CO., INC.)
- (no filing in the citation store)
- GTLS (CHART INDUSTRIES, INC.)
- (no filing in the citation store)
- FLS (FLOWSERVE CORP)
- (no filing in the citation store)
- PNR (Pentair plc)
- (no filing in the citation store)
Precision and Science Technologies (reported)
- IEX (IDEX CORP)
- (no filing in the citation store)
- GGG (GRACO INC.)
- (no filing in the citation store)
- DOV (DOVER Corp)
- (no filing in the citation store)
- ITT (ITT INC.)
- (no filing in the citation store)
- FELE (FRANKLIN ELECTRIC CO., INC.)
- (no filing in the citation store)
- WTS (WATTS WATER TECHNOLOGIES INC)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Ingersoll Rand FY2025 10-K · Ingersoll Rand Q1 2026 earnings call · Ingersoll Rand Q1 2026 earnings release