Trane Technologies's (NYSE:TT) Q4 CY2025: Beats On Revenue

HVAC company Trane (NYSE:TT) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 5.5% year on year to $5.14 billion. Its non-GAAP profit of $2.86 per share was 1.6% above analysts’ consensus estimates.

Is now the time to buy Trane Technologies? Find out by accessing our full research report, it’s free.

Company Overview

With low-pressure heating systems as its first product, Trane (NYSE:TT) designs, manufactures, and sells HVAC and refrigeration systems, the former to commercial and residential building customers and the latter to commercial truck manufacturers.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Trane Technologies’s sales grew at an impressive 11.4% compounded annual growth rate over the last five years. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Trane Technologies’s annualized revenue growth of 9.8% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, Trane Technologies reported year-on-year revenue growth of 5.5%, and its $5.14 billion of revenue exceeded Wall Street’s estimates by 0.8%.

Looking ahead, sell-side analysts expect revenue to grow 7.2% over the next 12 months, a slight deceleration versus the last two years. This projection is underwhelming and suggests its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Trane Technologies has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.6%. This result isn’t too surprising as its gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Trane Technologies’s operating margin rose by 4.3 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Trane Technologies generated an operating margin profit margin of 15.9%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Trane Technologies’s EPS grew at an astounding 24% compounded annual growth rate over the last five years, higher than its 11.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Trane Technologies’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Trane Technologies’s operating margin was flat this quarter but expanded by 4.3 percentage points over the last five years. On top of that, its share count shrank by 8.5%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Trane Technologies, its two-year annual EPS growth of 20.2% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q4, Trane Technologies reported adjusted EPS of $2.86, up from $2.61 in the same quarter last year. This print beat analysts’ estimates by 1.6%. Over the next 12 months, Wall Street expects Trane Technologies’s full-year EPS of $13.07 to grow 13.1%.

Key Takeaways from Trane Technologies’s Q4 Results

It was good to see Trane Technologies narrowly top analysts’ revenue expectations this quarter. EPS also beat, but EPS guidance for the upcoming fiscal year was just in line. Overall, we still think this quarter was decent. The stock remained flat at $397.50 immediately after reporting.

So do we think Trane Technologies is an attractive buy at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).