Trane Technologies Earnings: 2024 Guidance Raised After Very Strong Period

We’ve raised our fair value estimate for Trane Technologies by approximately 4% to $212 per share after the firm’s second-quarter revenue growth and operating margin were well ahead of our expectations. Second-quarter organic revenue increased 13% year over year, and adjusted operating margin expanded by 140 basis points to 19.4%. Trane’s management raised its full-year 2024 guidance, which now calls for 10% organic revenue growth (up from 8%-9% previously) and earnings per share of approximately $10.80 (versus $10.40-$10.50 previously). Our increased fair value estimate is mainly due to our upward-revised operating margin outlook; we now model for the operating margin to reach 18% by 2026 (up from our estimate of 17.4% in 2024 and 16.3% in 2023).