INGERSOLL-RAND | Consistently Performing Businesses #2
Price vs Fundamentals over the last 20 Quarters
How to read this Chart?
In this series of consistently performing businesses, we will look at the key fundamental statistics of Ingersoll-Rand and how it has changed over the last 23 Quarters.
Key Fundamental Indicators include:
Revenue TTM: It stands for "Revenue Trailing Twelve Months." It's a metric used to analyze a company's performance by calculating the total revenue generated over the preceding twelve months. We use it to remove any seasonalities associated with the business.
Operating Profit TTM: Again it is the sum of operating profit generated over the preceding 12 months.
Operating Profit Margin (OPM)% = Operating Profit/Revenue expressed as %
ROIC%: ROIC stands for "Return on Invested Capital”. ROIC indicates how well a company is utilizing its invested capital to generate profits.
ROIC = Net Operating Profit After Tax (NOPAT) / Invested Capital
If a company can increase its revenues and profits over time maintaining its margin and return on capital, it is indicative of a good past performance and a stable footing.
There are 2 parts to Fundamental Analysis. How the company has executed in the Past (Quantitative Analysis) and how well it is placed for the Future (Qualitative Analysis). When we look at the data points as presented in the chart above, we mostly see the past and recent performances. It is like a rear-view mirror. It is not indicative of future performance.
One needs to keep track of the company’s performance periodically and keep updating this chart.
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