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Ingersoll-Rand plcIR has announced that it is offering twin rewards for shareholders in forms of share buyback authorization and quarterly dividends. These rewards have been approved by the company's board of directors.
We believe that such disbursements reflect Ingersoll-Rand's strong cash position and commitment of rewarding shareholders handsomely.
Details of Share Buyback & Quarterly Dividend
Under the aforementioned buyback authorization, Ingersoll-Rand has been allowed to repurchase shares of up to $1.5 billion. This new program will commence only after the company completes $1.5-billion share buyback program, authorized in February 2017.
Additionally, the company declared that it has been authorized to pay a quarterly cash dividend of 53 cents per share to shareholders of record as of Dec 7. The payment will be made this year on Dec 31.
Sound Capital-Allocation Strategies
Ingersoll-Rand uses free resources for strengthening growth prospects while making acquisitions and rewarding shareholders through share buybacks and dividend payments.
Over the last five years (2013-2017), Ingersoll-Rand's annual dividend payments increased from 63 cents in 2013 to $1.70 in 2017.
In the first half of 2018, Ingersoll-Rand paid dividends amounting to $221.8 million to its shareholders while repurchased shares worth $500.1 million. It's worth mentioning here that the company increased its quarterly dividend rate by 18%, from 45 cents to 53 cents in June 2018, resulting in annual dividend rate hike from $1.80 to $2.12. Moreover, at the end of first half of 2018, the company was left with $400-million authorization of the buyback program authorized in February 2017.
We believe that rise in Ingersoll-Rand's profitability and strong cash position will enable it to return higher value to shareholders in the years ahead. Notably, the company's net income increased 19.8% year over year in the second quarter of 2018. Exiting the reported quarter, its cash and cash equivalents were $969.5 million.
For 2018, Ingersoll-Rand now anticipates earnings of $5.00-$5.50 per share compared with $5.00-$5.20 stated earlier. The mid-point of the revised guidance is $5.25, higher than the previous mid-point. Organic top-line growth for the year is projected to be 7-8%, higher than the previous guidance of 3-3.5%.
Zacks Rank & Other Stocks to Consider
With a market capitalization of $25.6 billion, Ingersoll-Rand currently carries a Zacks Rank #2 (Buy). In the past three months, the company's share price has rallied 16.1%, outperforming 11.4% increase recorded by the industry .
Moreover, the Zacks Consensus Estimate for earnings per share is pegged at $5.54 for 2018 and $6.22 for 2019, reflecting growth of 0.5% and 1.1% from their respective tallies 60-days ago.
Ingersoll-Rand PLC (Ireland) Price and Consensus
Ingersoll-Rand PLC (Ireland) Price and Consensus | Ingersoll-Rand PLC (Ireland) Quote
Other top-ranked stocks in the industry are Altra Industrial Motion Corp. AIMC , Colfax Corporation CFX and DXP Enterprises, Inc. DXPE . All these stocks sport a Zacks Rank #1 (Strong Buy).
In the last 60 days, earnings estimates for each of these stocks improved for the current year. Further, average positive earnings surprise for the last four quarters was 4.01% for Altra Industrial Motion, 7.91% for Colfax and 101.32% for DXP Enterprises.
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