Breaking Down Ingersoll Rand Inc. (IR) Financial Health: Key Insights for Investors

You're looking at Ingersoll Rand Inc. (IR), trying to figure out if this industrial giant can keep compounding growth in a softer macro environment, and the short answer is that the company is defintely on solid footing, but the near-term picture requires precision. For the full 2025 fiscal year, management has guided for revenue between $7.5 billion and $7.7 billion, with Adjusted Earnings Per Share (EPS) expected to land in the $3.25 to $3.31 range, which is just slightly below the consensus estimate. Still, the company's financial health is undeniable; they closed the third quarter of 2025 with $3.8 billion in liquidity, and that low 1.8x Net Debt-to-Adjusted EBITDA leverage ratio gives them serious firepower for acquisitions, like the $249 million deployed to M&A in that same quarter. We need to look past the top-line growth-which hit $1,955 million in Q3 2025-and focus on the slowing organic orders and margin pressures that signal a near-term slowdown. This is a capital allocation story, not a demand one.

Revenue Analysis

You need to know where Ingersoll Rand Inc. (IR)'s growth is actually coming from, not just the headline number. The direct takeaway for 2025 is this: while the top-line revenue growth looks solid, the underlying organic growth engine is sputtering, making the company defintely reliant on acquisitions to hit its targets.

For the full 2025 fiscal year, Ingersoll Rand Inc. (IR) is guiding for total revenue between $7.5 billion and $7.7 billion. That represents a year-over-year increase of 4% to 6%. But here's the quick math that matters: the organic growth-what the core business generates on its own-is expected to be flat or even decline by up to 2%. The entire lift is coming from bolt-on acquisitions and pricing power.

Primary Revenue Streams and Segment Contribution

Ingersoll Rand Inc. (IR) operates through two major segments, both focused on mission-critical flow creation and industrial solutions, but with different end-markets and growth profiles. The bulk of the company's sales still flows through the Industrial Technologies and Services (IT&S) segment, which is the traditional core business.

The IT&S segment provides a broad portfolio of products-think compressors, vacuum, and air treatment solutions, plus power tools and lifting equipment. The Precision and Science Technologies (P&ST) segment, on the other hand, focuses on high-margin, mission-critical precision liquid and gas handling for high-growth sectors like life sciences, food and beverage, and clean energy.

Based on the third quarter of 2025 (Q3 2025) results, which totaled $1,955 million in revenue, the contribution breakdown is clear:

• IT&S generated $1,541 million, making up about 78.8% of the total.
• P&ST generated approximately $414 million, contributing about 21.2%.

Also, don't forget the recurring revenue stream: aftermarket sales-parts, consumables, and services-represented a significant 37% of total revenue in Q2 2025, which provides a strong, resilient base for the business.

The Shift to M&A-Driven Growth

The most significant change in the revenue profile for 2025 is the shift in the growth driver. The company is actively using its balance sheet to acquire growth, a strategy that is now central to its financial performance. What this estimate hides is that external factors are forcing the change.

For the full year 2025, M&A (mergers and acquisitions) activity is projected to contribute roughly $375 million in revenue. This inorganic growth is what's bridging the gap left by a cautious organic environment, where demand in some core areas, like Renewable Natural Gas (RNG) in the US and the China market, has shown weakness. For example, the Q3 2025 IT&S revenue was up 5% overall, but organically it was actually down 2%. That tells you the acquisitions are doing the heavy lifting right now.

The P&ST segment is a key focus for this strategy, with recent acquisitions like Dave Barry Plastics enhancing their exposure to the Life Sciences market, which aligns with their Mission Statement, Vision, & Core Values of Ingersoll Rand Inc. (IR). This table shows the organic versus reported growth for the largest segment in Q3 2025:

The underlying demand is resilient, but the growth is expensive. You need to watch the cost of integrating these deals.

Profitability Metrics

You want to know if Ingersoll Rand Inc. (IR) is truly a high-margin business, and the short answer is yes-their profitability metrics for 2025 are defintely premium compared to the industry average. They're generating more profit per dollar of revenue than most peers in the industrial sector, but you need to look closer to see where the real strength, and the near-term risk, lies.

For the trailing twelve months (TTM) leading up to the second half of 2025, Ingersoll Rand Inc.'s gross profit margin stood at a robust 43.8%. That's a huge number for a company that deals with industrial equipment and flow creation solutions. To put that in perspective, the average gross profit margin for the broader Machinery industry is closer to 35.54%. That difference shows their pricing power and their manufacturing efficiency.

Here's the quick math on their core profitability for the TTM period:

• Gross Profit Margin: 43.8% (Significantly above the industry average of 35.54%)
• Operating Profit Margin (EBIT): 20.07%
• Net Profit Margin: 11.3% (Also above the Machinery industry average of 9.77%)

In the third quarter of 2025 alone, Ingersoll Rand Inc. reported net income of $244 million on revenues of $1.955 billion, translating to a quarterly net profit margin of approximately 12.5%. That's a strong, clean quarter.

Operational Efficiency and Margin Trends

Operational efficiency is where Ingersoll Rand Inc. shines, but it's also where you see the pressure points. The company's Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin-a key measure of operating performance-was 27.9% in Q3 2025. That's a very high figure for a diversified industrial firm, and it's driven by their focus on the high-margin aftermarket business and their Ingersoll Rand Execution Excellence (IRX) system.

What this estimate hides is a growing divergence between their two main segments. The Precision and Science Technologies (PNST) segment, which focuses on life sciences and fluid handling, is the star. Its Adjusted EBITDA margin hit a premium 30.8% in Q3 2025, showing the benefit of focusing on specialty, mission-critical applications. Honestly, that's almost a software company margin.

But, the larger Industrial Technologies and Services (IT&S) segment saw its Adjusted EBITDA margin drop to 29.0% in Q3 2025, a decline of 170 basis points year-over-year. This margin compression was directly attributed to two things: lower organic volume and, crucially, the dilutive impact of current tariff costs. So, while the consolidated numbers look great, you have to watch those tariff headwinds.

The company's strategy is clear: use their strong cash flow to acquire smaller, high-margin companies-like the recent bolt-on acquisitions-to keep the overall margin profile expanding. You can read more about their strategic focus here: Mission Statement, Vision, & Core Values of Ingersoll Rand Inc. (IR).

Here is a summary of the Q3 2025 segment performance:

Debt vs. Equity Structure

You want to know if Ingersoll Rand Inc. (IR) is using too much debt to fuel its growth, and the simple answer is no-the company maintains a conservative, well-balanced capital structure. As of the third quarter of 2025, their debt-to-equity (D/E) ratio sits at a healthy 0.47, which is low for a capital-intensive industrial manufacturer.

This low D/E ratio means that for every dollar of shareholder equity, Ingersoll Rand Inc. is carrying only about 47 cents of debt. For a company focused on mission-critical flow creation and industrial solutions, this level of financial leverage (using borrowed money to increase potential returns) suggests management is prioritizing financial flexibility and lower risk over maximizing tax-advantaged debt. It's a clear sign of balance sheet strength, not a red flag for investors.

Current Debt Load and Composition

Looking at the September 30, 2025, balance sheet, Ingersoll Rand Inc.'s total debt is manageable and mostly long-term. The company reported total debt of approximately $4.79 billion.

• Long-term debt, less current maturities: $4,786.7 million. This is the core of their debt structure, indicating stable, long-horizon financing.
• Short-term borrowings and current maturities of long-term debt: A minimal $1.4 million. This low figure shows virtually no near-term debt pressure.

The total equity base, which is the shareholders' stake, stood strong at approximately $10.19 billion at the end of Q3 2025, providing a substantial cushion against any operational headwinds.

Leverage and Industry Comparison

The debt-to-equity ratio of 0.47 is defintely a positive sign when you compare it to the broader diversified industrials sector. While there is no single, perfect industry average, a D/E ratio below 1.0 is generally considered conservative, and one below 0.5 is excellent for a company that relies on capital for manufacturing and acquisitions. The company's net debt-to-Adjusted EBITDA leverage ratio-a key metric for lenders-was also a modest 1.8x for the third quarter of 2025.

Here's the quick math on their capital structure (in millions USD, Q3 2025):

Financing Strategy and Capital Allocation

Ingersoll Rand Inc. uses its healthy balance sheet to execute a balanced capital allocation strategy that drives growth and returns cash to shareholders. In the third quarter of 2025, for example, the company deployed $249 million toward strategic mergers and acquisitions (M&A) to expand its portfolio. This is how they finance inorganic growth-using a mix of cash on hand and manageable debt, which is a smart move.

Plus, they are actively managing their equity. In the same quarter, they returned $201 million to shareholders through a combination of $193 million in share repurchases and $8 million in quarterly dividend payments. This shows a clear commitment to enhancing shareholder value while still growing the business. Their leverage increased slightly to 1.8x from the prior quarter's 1.7x, which is a direct consequence of funding these value-accretive M&A activities. You can read more about their strategic direction here: Mission Statement, Vision, & Core Values of Ingersoll Rand Inc. (IR).

Liquidity and Solvency

Ingersoll Rand Inc. (IR) shows a defintely strong liquidity position as of the third quarter of 2025, which gives them significant financial flexibility. You can see this strength in their high current and quick ratios, which are well above the typical 1.0x benchmark for industrial companies.

The company's ability to cover its short-term debts is excellent. Here's the quick math on their core liquidity metrics from Q3 2025:

• Current Ratio: 2.16. This means Ingersoll Rand has $2.16 in current assets for every dollar of current liabilities.
• Quick Ratio (Acid-Test Ratio): 1.51. Stripping out inventory-which can be slow to convert to cash-they still have $1.51 to cover every current liability dollar.

A quick ratio of 1.51 is particularly robust for a manufacturing business where inventory is a large component of current assets. This tells me they aren't relying on selling their entire stock just to pay the bills.

Working Capital and Cash Flow Trends

The strong ratios translate directly into a healthy working capital position, a key indicator of operational efficiency. Ingersoll Rand Inc. (IR) reported total available liquidity of $3.8 billion as of September 30, 2025, which includes $1.2 billion in cash on hand and $2.6 billion in undrawn capacity on their credit facilities.

The cash flow statement shows how this liquidity is being generated and deployed. The company's strategy is clear: generate strong operating cash flow and deploy it aggressively into growth and shareholder returns. You can follow the cash trail by looking at the three main activities:

For the third quarter, Ingersoll Rand Inc. (IR) generated $355 million in operating cash flow. They then deployed $249 million into mergers and acquisitions (M&A) and returned $201 million to shareholders through $193 million in share repurchases and $8 million in dividends. This pattern of high cash generation funding strategic M&A and buybacks is a sign of a mature, well-managed capital allocation strategy. Year-to-date, they have deployed $460 million to M&A and returned approximately $700 million to shareholders. That's a lot of capital moving. Breaking Down Ingersoll Rand Inc. (IR) Financial Health: Key Insights for Investors

Potential Strengths and Actions

The key strength is the sheer amount of liquidity and the manageable debt load. Their net debt-to-Adjusted EBITDA leverage was only 1.8x for Q3 2025, which is a very comfortable level that allows for further debt-funded acquisitions if the right opportunities arise. This balance sheet strength is a strategic asset; it lets them continue their bolt-on M&A strategy without stressing their financial structure. The only potential concern, and it's a minor one, is ensuring that the pace of M&A deployment-like the $249 million in Q3-continues to integrate smoothly and deliver the expected returns, otherwise, that cash is just sitting in goodwill. Your action here is to check the post-acquisition performance in the upcoming quarters.

Valuation Analysis

You're looking at Ingersoll Rand Inc. (IR) and trying to figure out if you're getting a deal or buying into a premium. Honestly, the valuation metrics suggest the market is pricing in significant future growth, which means the stock isn't cheap right now. The short answer is: Ingersoll Rand Inc. is trading at a premium compared to its historical averages and many industrial peers, but analysts still see upside.

As of November 2025, the stock's valuation multiples tell a clear story of high expectations. Its trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio stands at about 54.48, which is quite high for an industrial company and is far above the sector median. This P/E is based on TTM Diluted Earnings Per Share (EPS) of approximately $1.350 as of September 2025.

Here's the quick math on the key multiples:

• Price-to-Earnings (P/E): 54.48x. This is a high multiple, suggesting investors expect earnings to grow substantially to justify the current price.
• Enterprise Value-to-EBITDA (EV/EBITDA): Approximately 16.63x. This multiple is closer to the industrial sector median but still reflects a healthy premium for the company's operating performance.
• Price-to-Book (P/B): Around 2.88x. This indicates the stock trades at nearly three times its book value, another sign of a premium valuation driven by intangible assets and growth prospects.

A high P/E isn't defintely a sell signal, but it does mean the company has to execute flawlessly on its projected growth, especially given its full-year 2025 guidance for Adjusted EPS of $3.25 to $3.31.

Stock Performance and Analyst Sentiment

The stock price trend over the last year shows volatility, but a strong long-term ascent. Ingersoll Rand Inc. hit its 52-week high of $106.03 and its all-time high of $105.25 back in November 2024. The stock has since pulled back, trading recently around $78.54 as of November 2025. This 52-week range of $65.61 to $106.03 shows a significant correction from its peak, presenting a potential entry point if you believe the growth narrative remains intact.

The analyst community is cautiously optimistic, which is why the stock is not in 'Strong Buy' territory. The consensus recommendation is a 'Moderate Buy' or 'Hold,' depending on which firm you look at, with a split of six 'Hold' and six 'Buy' ratings from a group of twelve brokerages. The average 12-month price target is approximately $93.90. That target implies an upside of about 19.42% from the current price, so there's still perceived room to run. Exploring Ingersoll Rand Inc. (IR) Investor Profile: Who's Buying and Why?

Dividend Profile: Small Yield, Strong Coverage

If you're looking for a major income play, Ingersoll Rand Inc. isn't it. The company prioritizes reinvestment and acquisitions over a high dividend payout. For the 2025 fiscal year, the annual dividend is a modest $0.08 per share. This translates to a very low dividend yield of about 0.11%.

However, the dividend is extremely safe. The payout ratio, based on earnings, is remarkably low at approximately 5.9%. This low payout ratio means the company uses less than 6 cents of every dollar of earnings to pay the dividend, leaving the other 94 cents for growth investments, share buybacks, or M&A. This signals financial strength and a focus on capital appreciation over income. They returned $201 million to shareholders in Q3 2025, with $193 million of that coming from share repurchases. That's where the capital is really going.

To summarize the dividend situation:

Your next step should be to compare Ingersoll Rand Inc.'s premium valuation multiples against its projected revenue growth of 4%-6% for the full year 2025. If you think their industrial and precision technologies segments can accelerate organic growth faster than the market expects, the premium P/E might be justified.

Risk Factors

You're looking at Ingersoll Rand Inc. (IR) and seeing strong fundamentals, but every industrial powerhouse has near-term risks you must account for. The biggest immediate concern is a timing mismatch between rising costs and the revenue from offsetting price hikes, which is pressuring 2025 margins.

The company is defintely executing well-Q3 2025 revenue hit $1,955 million, up 5% year-over-year. Still, the market reacted cautiously because of a guidance trim, which points directly to the short-term risks. It all boils down to a few core operational and external headwinds that are hitting the financials right now.

External and Operational Headwinds

The most concrete financial risk for the 2025 fiscal year is the unexpected increase in raw material costs due to trade policy. Specifically, the total headwind from tariffs, like the Section 232 tariffs on steel and aluminum, is now expected to be slightly over $100 million for the full year 2025. This is a material increase from their earlier estimate of around $80 million.

This cost increase is hitting the bottom line now, but the pricing actions Ingersoll Rand Inc. took to cover it are delayed. Here's the quick math: you book the order at the new, higher price, but you don't recognize the revenue until the product ships. Since many products are long-cycle, that higher revenue is pushed out, mostly into 2026. This timing issue is what's causing the margin pressure in the Industrial Technologies and Services (ITNS) segment today.

• Geopolitical tensions and cyber events can disrupt global operations.
• Evolving legal, regulatory, and tax regimes create compliance uncertainty.
• Changes in general economic conditions could mute demand in core industrial markets.

Strategic and Financial Risks

Ingersoll Rand Inc. has a core strategy of using targeted bolt-on acquisitions to drive growth, deploying $249 million to M&A in the third quarter of 2025 alone. This is a great growth engine, but it introduces execution and financial risks.

The biggest strategic risk is the failure to realize the anticipated benefits and synergies from these completed and proposed business combinations. If integration takes 14+ days, churn risk rises, and you lose the value proposition. Also, while the company has strong liquidity of $3.8 billion as of September 30, 2025, its net debt-to-Adjusted EBITDA leverage ratio rose modestly to 1.8x in Q3 2025 due to this proactive capital deployment. This is still a healthy ratio, but it's a number to watch as they continue their M&A spree.

A major operational risk is the divergence between their two main segments. In Q3 2025, the Precision and Science Technologies (PNST) segment was a star, with margins hitting 30.8%. But the ITNS segment, the larger part of the business, faced headwinds, seeing a 2% decline in organic sales. This uneven performance means the company is relying heavily on its specialty markets to offset weakness in its core industrial business.

Mitigation and Actionable Insights

Management is not sitting still. They are tackling these risks with clear, concrete actions. To mitigate the tariff impact, they've taken 'sticky' pricing actions, meaning they intend to hold those prices even if costs ease, which is a strong signal of pricing power. For the ITNS segment's operational weakness, they are implementing cost cuts, including headcount restructuring, to position the segment for a leaner, more profitable 2026.

The company also maintains a healthy balance sheet, which gives them the flexibility to weather these short-term shocks. Their commitment to their long-term 2027 margin targets remains firm, viewing the 2025 tariff and pricing issue as a timing problem, not a fundamental flaw in their strategy. For a deeper dive into the company's long-term vision, you should review their Mission Statement, Vision, & Core Values of Ingersoll Rand Inc. (IR).

Growth Opportunities

You're looking at Ingersoll Rand Inc. (IR) and wondering where the next dollar of growth comes from, especially with organic growth facing near-term pressure. The simple answer is that the company has a highly disciplined, two-speed growth engine: inorganic growth through M&A and a resilient aftermarket business that stabilizes the core.

For the 2025 fiscal year, management has updated its guidance, projecting total revenue growth in the range of 4% to 6%. This growth is heavily reliant on acquisitions, as the organic growth forecast sits between -2% and 0%. The core industrial market is a bit sluggish right now, but the company is simply buying its way into faster-growing niches. It's a smart, realistic strategy for a mature industrial player.

Here's the quick math on the 2025 outlook:

• Total Revenue Growth: 4% to 6% (YoY)
• Adjusted EBITDA: $2,100 million to $2,160 million
• Adjusted EPS: $3.34 to $3.46

The real story is in the M&A pipeline, which is a key growth driver. Ingersoll Rand Inc. expects completed acquisitions to contribute approximately $375 million to 2025 revenue. They have a repeatable, bolt-on acquisition strategy, focusing on companies that expand their total addressable market (TAM) in high-margin sectors. They've expanded their TAM by $12 billion in 2024 alone. They are defintely a premier growth compounder.

The M&A strategy is laser-focused on two high-growth, high-margin areas:

• Life Sciences: Acquisitions like Dave Barry Plastics enhance their footprint in specialty markets, which are seeing tailwinds from biopharma and Active Pharmaceutical Ingredients (APIs) reshoring trends in the US.
• Renewable Natural Gas (RNG): The acquisition of Termomeccanica Industrial Compressors S.p.A. (TMIC) and Adicomp S.p.A. for about €160 million strengthens their position in this clean energy sector.

This inorganic approach is complemented by strong competitive advantages. Their aftermarket business, which includes recurring service contracts, is a massive stabilizer, representing 37% of total revenue in Q2 2025. Plus, they maintain pricing power-management calls their pricing 'sticky'-which contributed about 2.7% to organic growth in Q3 2025, helping to offset volume softness and tariff headwinds. Operational execution, driven by the IRX (Ingersoll Rand Execution Excellence) system, is what keeps margins healthy even when organic volume is flat or down.

To see the full picture of their financial strength, including liquidity and debt profile, you should check out the deeper dive at Breaking Down Ingersoll Rand Inc. (IR) Financial Health: Key Insights for Investors.

What this estimate hides is the timing of big projects. Management noted that some large-scale clean energy projects, like those tied to the IRA (Inflation Reduction Act) rush, won't translate into significant revenue until the 2027-2028 timeframe. So, while the 2025 numbers look solid, the true payoff from their strategic market expansions is a bit further out. Finance: continue to monitor M&A integration costs quarterly.