Industrial Select Sector

S&P 500

The Balanced Allocator

Comparable Companies - IR

The insider activity record shows 0 discretionary purchases and 22 discretionary sales totaling $50,230,206.48. The latest short interest is 4.1% of float with a days‑to‑cover of 2.2. The primary institutional holders are Capital International Investors (13.4% stake), Vanguard Group Inc. (11.5% stake) and BlackRock, Inc. (7.7% stake).

SENIOR VICE PRESIDENT AND CFO

DIRECTOR

SEE REMARKS

VP, CHIEF ACCOUNTING OFFICER

Beneficial ownership of 21,791,309 shares representing 5.5% of the common stock.

Beneficial ownership of 32,118,760 shares representing 8.1% of the common stock.

Beneficial ownership of 51,326,399 shares representing 12.9% of the common stock.

Beneficial ownership of 26,792,558 shares representing 6.6% of the common stock.

Beneficial ownership of 28,911,292 shares representing 7.2% of the common stock.

Beneficial ownership of 43,450,015 shares representing 10.8% of the common stock.

Continues to lead the company following the 2020 merger of Gardner Denver and Ingersoll Rand's industrial segment.

Chairman, President and Chief Executive Officer

Serves as CFO since June 2020, overseeing global financial strategy and capital allocation.

Senior Vice President and Chief Financial Officer

Maintains oversight of legal, compliance, and corporate secretarial functions.

Senior Vice President, General Counsel, Chief Compliance Officer and Secretary

Leads global HR strategy, talent development, and DEI initiatives.

Senior Vice President and Chief Human Resources Officer

Oversees M&A strategy and execution, including the significant 2024 acquisition of ILC Dover.

Senior Vice President, Corporate Development

Appointed to the board to enhance leadership in innovation and operational excellence, drawing on his experience as former President at Tesla.

Independent Director

Appointed following a board size reset in July 2025; brings extensive M&A and strategic growth experience from McKinsey & Company.

Stepped down from the board during the July 2025 restructuring and size reset.

Former Independent Director

Vicente Reynal

Vikram Kini

Elizabeth Meloy Hepding

William P. Donnelly

Jerome Guillen

Aurobind Satpathy

Vicente Reynal is a 'provenance' leader whose career is deeply rooted in the Danaher Business System, which he has successfully adapted into the Ingersoll Rand Execution Excellence (IRX) model. His tenure is marked by aggressive but disciplined M&A, most notably the $2.3B ILC Dover deal, and a unique commitment to employee ownership as a driver of productivity. Under his leadership, the company has transitioned from a traditional industrial player to a high-margin, life-sciences-adjacent growth compounder, evidenced by the 8x increase in enterprise value over his broader leadership tenure.

Vikram Kini is a career finance specialist with deep institutional knowledge of the Ingersoll Rand/Gardner Denver portfolio. His performance is characterized by the successful execution of complex post-merger integrations and a disciplined approach to capital allocation that balances high-multiple M&A with significant share repurchases. His long-standing partnership with Reynal provides the company with a stable, unified executive front that has consistently delivered top-quartile Total Shareholder Return (TSR) relative to industrial peers.

Jennifer Hartsock

John Humphrey

Marc E. Jones

JoAnna L. Sohovich

Mark P. Stevenson

Michelle Swanenburg

Dover focuses on organic growth through operational excellence and strategic acquisitions, with an emphasis on portfolio discipline and productivity initiatives to achieve above-market growth and high margins.

The ITW Business Model is a powerful and highly differentiated competitive advantage centered on 80/20 Front-to-Back, decentralized entrepreneurial culture, and customer-back innovation.

Emerson is a global technology and engineering company that provides innovative solutions for industrial, commercial, and consumer markets through its four segments: Final Control, Measurement & Analytical, Discrete Automation, and Safety & Productivity.

Roper is a diversified technology company that operates market-leading businesses designing and developing vertical software and technology-enabled products for defensible niche markets.

Includes Aderant, CentralReach, Clinisys, Data Innovations, Deltek, Frontline, IntelliTrans, PowerPlan, Procare, Strata, Transact/CBORD, and Vertafore.

Includes ConstructConnect, DAT, Foundry, iPipeline, iTradeNetwork, MHA, SHP, SoftWriters, and Subsplash.

Includes CIVCO Medical Solutions, FMI, Inovonics, IPA, Neptune, Northern Digital, rf IDEAS, and Verathon.

The company reports 172 significant properties worldwide (120 leased, 52 owned). Manufacturing facilities are located in the Americas (16 owned, 35 leased), EMEIA (20 owned, 40 leased) and APAC (7 owned, 11 leased). The corporate headquarters is a leased facility at 525 Harbour Place Drive, Davidson, North Carolina. Total property, plant and equipment net is $930.3 million.

Ingersoll Rand, a Mature_Compounder with 5-year revenue CAGR around 10%, 15% average operating margins, and consistent FCF positivity, faces deteriorating profitability in FY2025 with operating margins falling to 15.0% from 18.0% and net margins to 7.6% amid acquisition-driven 5.7% revenue growth masking organic weakness, rising net debt to $3.54B at 2.3x EBITDA, and poor reinvestment returns at incremental ROIC -45.3%. While CEO Vicente Reynal's exceptional track record of 8x value creation at Gardner Denver and strong board refreshment with M&A experts provide leadership stability, weak capital allocation via value-destructive $5.7B M&A and poorly timed buybacks, combined with misaligned incentives evidenced by heavy insider selling and undisclosed comp metrics, render this team inadequate stewards for compounding per-share value in the current margin-pressured environment.

As of December 31, 2025, the Company had over 21,000 employees worldwide, with approximately 6,100 in the United States. Voluntary turnover rates were 8.1% for hourly and 7.8% for salaried employees in 2025. The employee engagement score was 81 with an 88% participation rate in the 2025 survey.

Revenue rose 5.7% YoY to $7.65 bn in FY2025, but the increase was 90% acquisition‑driven and FX‑enhanced; organic order growth was low‑single‑digit, operating margin fell from 18.0% to 15.0%, net margin slipped to 7.6%, and net debt rose 10% to $3.54 bn, pushing net‑debt/EBITDA above 2×.

The company describes CapEx as capacity‑expansion to meet demand in high‑growth markets (P14 Innovation dossier). Transcript commentary emphasizes a bolt‑on M&A focus, with $525 million deployed across 16 deals in FY2025 and a $1 billion share‑repurchase authorization, indicating that organic capacity expansion is secondary to acquisition‑driven growth. The MD&A links capital spending to meeting demand and supporting acquisitions, but the actual spend is modest relative to cash flow.

Impairments recorded in FY2025 include a $36.1 million tradename write‑down in Precision & Science, a $7.6 million tradename write‑down in Industrial, and a $13.9 million technology‑asset impairment (P14 physical assets). No plant closures were disclosed. The auditor did not flag impairments as a Critical Audit Matter, but the recurring nature of intangible write‑downs erodes the tangible book floor.

Capital deployed into acquisitions (e.g., ILC Dover, Synomics) has not yet generated returns above the cost of capital; the incremental ROIC is negative, indicating value destruction. The Innovation dossier notes $114.3 million of R&D (not captured in the cash‑flow statement) aimed at life‑science and AI‑enabled products, but the short‑term impact on ROIC is negligible.

Senior Unsecured Notes (aggregate of 2027, 2028, 2029, 2031, 2033, 2034, 2054 series)

P/FCF

Andrew Schiesl

Kathleen Keene

Michael Weatherred

Gary D. Forsee

Kirk E. Arnold

Michael A. Weatherred

Ratification of appointment of Deloitte & Touche LLP as independent registered public accounting firm for 2025

Non-binding advisory vote to approve executive compensation

Matthew J. Emmerich

Senior VP & Chief Information Officer

Senior Vice President of Corporate Development

Ingersoll Rand Inc. is a diversified, global provider of mission-critical flow-creation products and industrial and life-science solutions. The company designs, manufactures, markets and services a broad portfolio of compressors, pumps, vacuum and blower equipment, as well as precision dosing, liquid-handling and powder-handling systems. Products are sold under more than 90 market-leading brands, including Ingersoll Rand and Gardner Denver, and are used in industrial manufacturing, clean energy, transportation, medical, laboratory, food and beverage, and chemical processing end-markets worldwide.

Designs, manufactures, markets and services compression, vacuum, fluid-transfer and loading equipment for industrial manufacturing, transportation, chemical processing, food & beverage, clean energy and other applications.

Designs, manufactures and markets specialized pumps, fluid-management equipment, single-use powder handling systems and contract-design services for medical, laboratory, water-treatment, chemical processing, clean-energy and other markets.

Held WACC 10.9% and base case terminal multiple 20.0x constant, solved for Year 5 margin required to justify current price of 91.12.

Balance Sheet - Supplemental

Balance Sheet

Cash Flow Statement - Supplemental

Cash Flow Statement

Income Statement - Supplemental

Income Statement

Ratios

Valuation

Historical Ratios & Multiples - IR

Machinery sector rational oligopoly/Golden Age cycle (peers capex 1.3-2.7% revenue); tailwinds automation/AI/life sciences offset tariffs/supply risks; IR underperforms 1Y sector alpha -19.7%.

Recent Q4 FY2025 results showed record orders/revenue but EPS miss (-1.83 actual vs 3.29 est), with FY2026 guide implying flattish margins amid tariffs; timely amid 4.1% short interest.

Q2 FY2026 earnings confirming tariff mitigation and organic reacceleration to mid-single-digits, addressing margin fears (FY2025 -300bps) and validating IRX pricing. Rationale: Backlog pricing realization per transcripts offsets $100M+ costs.

Ingersoll Rand's growth masks structural weakness: FY2025 revenue reached $7,651M (+5.7% YoY) via $420M acquisitions and $92M FX, but low-single-digit organic orders and $100M+ tariffs drove margins to 15.0% from 18.0%, with ROIC at 14.9% vs peers' 27.6%. $5.7B M&A yielded -45.3% incremental ROIC, insider sales hit $50.2M (zero buys), signaling misallocation. Downside protection via $51.55 bear DCF justifies selli...

Moat erosion via sustained tariffs >$150M and low-cost compressor rivals impairing pricing power, compressing ROIC below 10%.

1-2% growth, 13.5% margins on tariff failure; 18x terminal; $51.55 floor.

Stewardship weak: $50.2M insider sales (CEO 191k shares Jan 2026 at $88.12); M&A destroys value; board strong (90% independent, recent adds Satpathy/Guillen) but comp metrics undisclosed.

Liquidation value analysis is not relevant for the company's archetype ('Mature_Compounder') and was not performed.

Ingersoll Rand reports record Q2 2025 orders, revenue, and adjusted EBITDA

Market/Sector Move +9.84%

Market/Sector Move -5.20%

Ingersoll Rand appoints Michelle Swanenburg to Board of Directors

Capital Research Global Investors reports 4.7% beneficial ownership of Ingersoll-Rand, Inc. common stock

Ingersoll Rand reports record Q2 2024 revenue, raises full-year guidance

Ingersoll Rand reports record Q1 2024 revenue, adjusted EBITDA, and adjusted EPS

Ingersoll Rand reports record Q3 2023 results, raises full-year guidance

Ingersoll Rand amends credit agreement to increase revolving credit commitments

Ingersoll-Rand price target raised to $110 from $92 at Wells Fargo

Ingersoll-Rand price target raised to $87 from $81 at Stifel

Ingersoll-Rand price target lowered to $100 from $103 at Baird

Ingersoll-Rand price target raised to $92 from $87 at Wells Fargo

Ingersoll-Rand price target raised to $81 from $75 at Stifel

Ingersoll-Rand price target raised to $79 from $78 at Stifel

Situation: Current price is $91.12 versus fair value $66.12 (-27.4% expected return), and valuation confidence is stable. Debate: Bull case depends on Q2 FY2026 earnings confirming tariff mitigation and organic reacceleration to mid-single-digits, addressing margin fears (FY2025 -300bps) and validating IRX pricing. Bear case centers on Moat erosion via sustained tariffs >$150M and low-cost compressor rivals impairing pricing power, compressing ROIC below 10%. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.

Executive Summary

Ingersoll Rand's growth masks structural weakness: FY2025 revenue reached $7,651M (+5.7% YoY) via $420M acquisitions and $92M FX, but low-single-digit organic orders and $100M+ tariffs drove margins to 15.0% from 18.0%, with ROIC at 14.9% vs peers' 27.6%. $5.7B M&A yielded -45.3% incremental ROIC, insider sales hit $50.2M (zero buys), signaling misallocation. Downside protection via $51.55 bear DCF justifies selling at 25.2x EV/EBITDA premium to 19.5x peer median.<ul><li>Driver: Eroding profitability and weak reinvestment returns, with operating margins contracting 300bps to 15.0% in FY2025 on $7,651M revenue despite 5.7% YoY growth that was 90% acquisition-driven.</li><li>Catalyst: Recurring impairments ($57M in FY2025) and tariff pricing lags exposing M&A integration failures.</li><li>Protection: Bear case DCF of $51.55/share, 43% below current $91.12, modeling permanent moat erosion and 13.5% margins.</li></ul>Our variant perception is based on time arbitrage. The market is pricing the stock for sustained compounding at 25.2x EV/EBITDA, whereas our analysis of the brand/moat suggests returns on capital will fade to peer average (ROIC 14.9% vs 27.6% median) amid tariff persistence and M&A destruction, justifying a 27% discount to $66.12 today.This is a short-biased trade predicated on the failure of a proven business model to compound per-share intrinsic value amid eroding moat and poor capital allocation.

Core Investment Rationale

Ingersoll Rand designs, manufactures, and services mission-critical air, fluid, energy, specialty vehicle, and medical technologies across Industrial Technologies and Services (80%+ revenue: compressors, pumps, blowers, power tools, aftermarket) and Precision and Science Technologies (20%: dosing pumps, fluidics for life sciences, chemical processing). Revenue totaled $7,651M in FY2025 (+5.7% YoY, 90% acquisition/FX-driven), with 37% recurring from $450M aftermarket/services and $1.1B backlog. Strategy emphasizes bolt-on M&A (16 deals/$525M in FY2025 at 9x multiples for mid-teens ROIC by year 3), IRX operating model for pricing/cost discipline, and life sciences expansion via ILC Dover ($2.3B) and Synomics. Gross margins held at 43.6% despite $100M+ tariffs (one-for-one pricing lagged), operating margins fell 300bps to 15.0% on impairments/restructuring, FCF at $1,220M (15.9% margin).Core assets include 2,000+ patents, $255M indefinite-life tradenames (Ingersoll Rand, ARO, Thomas), $8.5B goodwill, $4.2B intangibles (customer relationships/technology), and 172 properties (52 owned manufacturing sites). Proprietary tech like AI-enabled IIoT/cloud monitoring, single-use powder handling (ILC Dover), and aftermarket parts lock-in via service contracts. 70% assets intangible, negative tangible book -$2.6B.Operates in rational oligopoly vs Dover (revenue -1.1% YoY, 39.8% gross margin), ITW (0.9% growth, 44.1% margin), EMR (3.6% growth, 52.8% margin), ROP (12.3% growth, 69.2% margin). IR trails peer median on margins (43.6% vs 48.5%) and ROIC (14.9% vs 27.6%), with 14-16% global compressor share but eroding moat from low-cost rivals and tariffs.Founded 1859, rebranded post-2020 Gardner Denver merger; revenue CAGR 9.4% over 5 years to $7,651M FY2025, FCF consistently positive (100% years). Key moves: $15B 2020 merger, $2.3B ILC Dover (2024, life sciences TAM to $65B), 16 bolt-ons ($525M FY2025). FY2025 challenges: organic low-single-digits, tariffs >$100M, impairments $57M, net debt +10% to $3,536M (2.3x EBITDA). Recent board refresh: added Aurobind Satpathy (M&A expert, Jul 2025), Jerome Guillen (Tesla ops, Jan 2026); exits Forsee/Arnold (Jul 2025). No proxy fights; insiders sold $50.2M (zero buys).

Business & Situation

<ul><li>Bull Case: Robust M&A pipeline (16 deals FY2025/$525M, avg 9x) drives recurring to $1B target; backlog $1.1B/book-to-bill 1.04x YTD; life sciences mid-teens orders via ILC Dover/Synomics; FCF $1,220M (95% conversion guide FY2026).</li><li>Bear Case: Organic low-single-digits amid tariffs ($100M+); margins -300bps to 15.0%; $5.7B M&A 0.1x effective/-45.3% inc. ROIC; insiders $50.2M sales; short interest 4.1% rising.</li></ul>Consensus views IR as quality compounder with M&A firepower and aftermarket stability justifying 25.2x EV/EBITDA premium; Wells Fargo PT $110 (+11.7% from $98.52 Feb 2026), Baird $100 (+31% from $76.33 Nov 2025). Overlooks FY2025 reality: 5.7% growth 90% inorganic/FX, margins crushed to 15.0%, ROIC 14.9% vs peers 27.6%.Machinery sector rational oligopoly/Golden Age cycle (peers capex 1.3-2.7% revenue); tailwinds automation/AI/life sciences offset tariffs/supply risks; IR underperforms 1Y sector alpha -19.7%.Market fixates on short-term M&A backlog while ignoring moat erosion (gross margin 43.6% vs peer 48.5%, ROIC gap 12.7pts) and destructive allocation ($5.7B M&A -45.3% inc. ROIC). History of stable high-ROIC (19.9% 3Y avg) fading; DCF implies 18.2% Y5 margin for breakeven-optimistic vs 15.0% 5Y avg.Bear arguments dominate: valuation 37.3x EV/EBIT (vs peer 21.2x) ignores margin fade and $50.2M insider sales; fair value $66.12 (-27%) warrants Sell.Our analytical edge comes from deeper scrutiny of intangible moat durability and reinvestment returns, revealing market underestimation of high-ROIC fade amid M&A failures and tariffs.

Core Thesis

CEO Vicente Reynal (tenure 10Y) grew enterprise value 8x at Gardner Denver (2016-2020 IPO/$15B merger), adapted Danaher Business System to IRX; but FY2025 incremental ROIC -45.3% on $5.7B M&A questions recent execution.$2.4B buybacks (9.2% net yield, but Q4 2025 score 20/100 at 27.1x EV/EBITDA); $5.7B M&A (0.1x effective); $137M dividends (payout 6%).Transcripts defend tariff pricing (one-for-one) despite -300bps margins; Q3 FY2025 EPS guide cut $0.12 on lags, quarterly beats 84% but annual 0%.<ul><li>Board Independence: 90% (9 of 10 directors)</li><li>Chairman/CEO Roles: Combined</li><li>Chairman Tenure: 5 years</li><li>Insider Ownership: 0.68%</li><li>Shareholder Rights: Majority voting, no supermajority</li></ul>Stewardship weak: $50.2M insider sales (CEO 191k shares Jan 2026 at $88.12); M&A destroys value; board strong (90% independent, recent adds Satpathy/Guillen) but comp metrics undisclosed.

Leadership & Governance

The valuation floor is anchored to the Bear Case DCF value of $51.55, which models permanent moat erosion, 13.5% margins, and 1-2% growth.4% Y1 revenue growth (low-single organic + M&A/FX), margins to 16.5% Y5 on pricing; FCF $1,581M Y5; 20x terminal; $69.79/share.6% growth, 17.5% margins via life sciences; $81.51 Blue-Sky Potential.1-2% growth, 13.5% margins on tariff failure; 18x terminal; $51.55 floor.

Valuation Context

<ul><li>Q2 FY2026 earnings confirming tariff mitigation and organic reacceleration to mid-single-digits, addressing margin fears (FY2025 -300bps) and validating IRX pricing. Rationale: Backlog pricing realization per transcripts offsets $100M+ costs.</li><li>Ingersoll Rand's growth masks structural weakness: FY2025 revenue reached $7,651M (+5.7% YoY) via $420M acquisitions and $92M FX, but low-single-digit organic orders and $100M+ tariffs drove margins to 15.0% from 18.0%, with ROIC at 14.9% vs peers' 27.6%. $5.7B M&A yielded -45.3% incremental ROIC, insider sales hit $50.2M (zero buys), signaling misallocation. Downside protection via $51.55 bear DCF justifies selli...</li><li>Recent Q4 FY2025 results showed record orders/revenue but EPS miss (-1.83 actual vs 3.29 est), with FY2026 guide implying flattish margins amid tariffs; timely amid 4.1% short interest.</li></ul>Recent Q4 FY2025 results showed record orders/revenue but EPS miss (-1.83 actual vs 3.29 est), with FY2026 guide implying flattish margins amid tariffs; timely amid 4.1% short interest.

Catalyst Path & Context

<ul><li>Moat erosion via sustained tariffs >$150M and low-cost compressor rivals impairing pricing power, compressing ROIC below 10%. FY2025 gross margin -20bps to 43.6% vs peers 48.5%; China organic weakness.</li><li>1-2% growth, 13.5% margins on tariff failure; 18x terminal; $51.55 floor. Risk monitor: Current price $91.12 vs fair value $66.12, expected return -27.4%.</li><li>Stewardship weak: $50.2M insider sales (CEO 191k shares Jan 2026 at $88.12); M&A destroys value; board strong (90% independent, recent adds Satpathy/Guillen) but comp metrics undisclosed. Risk monitor: Current price $91.12 vs fair value $66.12, expected return -27.4%.</li></ul>

Primary Risks

<ul><li>Entry Target: No new entries: recommendation is Sell.</li><li>Stop Loss: No stop-loss needed because recommendation is Sell (no position).</li><li>Position Size: Position size is None under current recommendation and risk constraints.</li><li>Time Horizon: N/A for a Sell recommendation.</li></ul><ul><li>Q4 FY2025 guide: H2 accretive price/cost; quarterly revenue beats 79%.</li><li>Monitoring trigger: Current price $91.12 vs fair value $66.12, expected return -27.4%.</li><li>FY2025 gross margin -20bps to 43.6% vs peers 48.5%; China organic weakness.</li></ul>Two consecutive quarters of organic decline >5% and ROIC <10%, confirming moat impairment. Also require valuation reliability to improve before re-entering.

Actionable Parameters & Monitoring

IR appears overvalued (fair value $66.12 vs current $91.12, expected return -27.4%). Recommendation: Sell; do not allocate until valuation and risk profile reset.

Final Conclusion

Eroding profitability and weak reinvestment returns, with operating margins contracting 300bps to 15.0% in FY2025 on $7,651M revenue despite 5.7% YoY growth that was 90% acquisition-driven.

Driver

Recurring impairments ($57M in FY2025) and tariff pricing lags exposing M&A integration failures.

Catalyst

Bear case DCF of $51.55/share, 43% below current $91.12, modeling permanent moat erosion and 13.5% margins.

Protection

Robust M&A pipeline (16 deals FY2025/$525M, avg 9x) drives recurring to $1B target; backlog $1.1B/book-to-bill 1.04x YTD; life sciences mid-teens orders via ILC Dover/Synomics; FCF $1,220M (95% conversion guide FY2026).

Bull Case

Organic low-single-digits amid tariffs ($100M+); margins -300bps to 15.0%; $5.7B M&A 0.1x effective/-45.3% inc. ROIC; insiders $50.2M sales; short interest 4.1% rising.

Bear Case

Situation: Current price is $91.12 versus fair value $66.12 (-27.4% expected return), and valuation confidence is stable. Debate: Bull case depends on Q2 FY2026 earnings confirming tariff mitigation and organic reacceleration to mid-single-digits, addressing margin fears (FY2025 -300bps) and validating IRX pricing. Bear case centers on Moat erosion via sustained tariffs >$150M and low-cost compressor rivals impairing pricing power, compressing ROIC below 10%. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.

Shifted from a growth-at-all-costs strategy emphasizing aggressive M&A and market expansion to a more disciplined, profitability-focused approach prioritizing cost optimization and tariff mitigation, while pivoting toward life sciences as a strategic growth vector.

Method	Implied Value	Weight	Weighted Value
DCF	$69.66	50%	$34.83
Comps	$58.74	30%	$17.62
Historicals	$68.32	20%	$13.66
Total Weighted			$66.12

IR

Company Overview

Price History