Reasons to Retain Trane Technologies Stock in Your Portfolio Now

Trane Technologies plc TT stock has had an impressive run over the past year. Shares have appreciated 17.3%, outperforming the 15.4% growth of the industry.

TT has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

The company’s earnings for 2025 and 2026 are expected to improve 14.2% and 10.5%, respectively, year over year. Revenues for 2025 and 2026 are anticipated to improve 7.4% and 6.7%, respectively.

Factors That Bode Well

Trane Technologies’ top line benefits from a strong Commercial HVAC market, with revenues growing 10.2% in the fourth quarter of 2024. Increasing demand for its innovative customer-centric solutions, energy-efficient products, and decarbonization efforts driven by government policies in the United States and Europe is fueling TT’s growth in this market.

Commitment to shareholder returns makes TT reliable for investors to compound wealth over the long term. In 2022, 2023 and 2024, the company repurchased shares worth $1.2 billion, $669.3 million and $1.3 billion, respectively. It paid $620.2 million, $683.7 million, and $757.5 million in dividends in 2022, 2023, and 2024, respectively.

Trane Technologies' current ratio (a measure of liquidity) in the fourth quarter of 2024 was 1.21, lower than the industry’s 1.27. However, the current ratio has increased from the year-ago quarter’s 1.14, mainly due to a rise in cash and equivalents. A current ratio of more than 1 should assist the company in paying off short-term debts efficiently.

Trane Technologies is seasonally balanced. Demand for air conditioning systems and services is low during autumn and winter, which is why in fourth-quarter 2023 and first-quarter 2024, revenues declined quarter-over-quarter by 9.4% and 4.7%, respectively. Similarly, when heating sales pick up during the second and third quarters, revenues rise, which is evident from quarter-over-quarter gains of 25.9% and 2.5% in the second and third quarters of 2024, respectively, offsetting weakness in autumn and winter. Additionally, the holidays being in this season would typically increase transport solution sales, further offsetting the seasonality.

A Risk

Trane Technologies operates in a fiercely competitive market, which poses additional threats for the company. The HVAC market is flooded with giants, including Honeywell International, Siemens, Carrier and Daikin Industries. Competition as such results in putting pressure on TT to continually innovate and differentiate its offerings while maintaining cost efficiency. Therefore, the necessity to invest in technology and talent to stay ahead in the game increases the difficulty in balancing growth and profitability.

Zacks Rank and Stocks to Consider

TT currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks are AppLovin APP and Climb Global Solutions, Inc. CLMB, each flaunting a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

AppLovin has a long-term earnings growth expectation of 20%. APP delivered a trailing four-quarter earnings surprise of 23.5%, on average.

Climb Global Solutions has a long-term earnings growth expectation of 12%. CLMB delivered a trailing four-quarter earnings surprise of 59.3%, on average.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research