Ingersoll Rand Inc.IRNYSE

Overview Intelligence Charts News Fundamentals DCF Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Sell

Fair Value: $52.34 per share(market-calibrated)

-46.2%

Upside to Fair Value

Current

$97.20

Pure Model

$48.17

Fair Value

$52.34

Bull Case

$58.81

Bear Case

$38.00

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

7.27%

Calibrated Growth

4.01%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $48.17.

What's Driving This Ratingfor IR

✓

CapEx already efficient

CapEx at 1.43% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 16.07% — below the sector mature average of 18.53%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.7B (16.07% margin).

→

Moderate revenue growth

Analyst consensus projects 3.97% revenue growth, fading to 2.25% by Year 10. Revenue reaches $10.7B (vs $7.7B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $38.83/share (14.1x terminal FCF) while exit multiple gives $57.50/share (24.8x terminal FCF). The 18x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.25% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $97.20, the market implies 7.27% perpetual growth — 502bps above the model's 2.25%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 72.57% indicates efficient cash generation. FCF reaches $1.7B by Year 10 (16.03% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.31

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.39%

Cost of Debt

Pre-tax Cost of Debt3.41%

Tax Rate27.15%

After-tax Cost of Debt2.48%

Equity Weight (E/V)89.00%

Debt Weight (D/V)11.00%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (89.00% × 10.39%) + (11.00% × 2.48%)

= 9.52%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$8.0B	$8.7B	$9.6B	$10.0B	$10.7B
EBIT	$1.3B	$1.4B	$1.5B	$1.6B	$1.7B
Tax	$347M	$379M	$418M	$438M	$468M
NOPAT	$931M	$1.0B	$1.1B	$1.2B	$1.3B
+ Depreciation	$479M	$523M	$577M	$603M	$645M
- Capex	$114M	$125M	$138M	$144M	$154M
- Δ NWC	$36M	$41M	$25M	$26M	$28M
Free Cash Flow	$1.3B	$1.4B	$1.5B	$1.6B	$1.7B
Discount Factor	0.913	0.761	0.635	0.529	0.403
Present Value	$1.2B	$1.0B	$976M	$850M	$692M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.7B

Terminal Growth Rate2.25%

WACC9.52%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$24.2B

PV of Terminal Value$9.7B

Exit Multiple Method

Year 10 EBITDA$2.4B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$42.6B

PV of Terminal Value$17.2B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$9.3B

PV of Terminal Value$9.7B

Enterprise Value$19.0B

(-) Net Debt$3.5B

Equity Value$15.5B

Shares Outstanding398M

Price per Share$38.83

Exit Multiple Method

PV of Projected FCFs$9.3B

PV of Terminal Value$17.2B

Enterprise Value$26.4B

(-) Net Debt$3.5B

Equity Value$22.9B

Shares Outstanding398M

Price per Share$57.50

Pure Model Fair Value

$48.17

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
7.52%	$59.48	$61.04	$62.89	$65.12	$67.88
8.52%	$52.39	$53.44	$54.66	$56.09	$57.79
9.52%	$46.58	$47.32	$48.17	$49.13	$50.25
10.52%	$41.70	$42.24	$42.84	$43.53	$44.30
11.52%	$37.52	$37.92	$38.37	$38.87	$39.42

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$38.00

-60.9% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.64

Base Case

$48.17

-50.4% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.31

Bull Case

$58.81

-39.5% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 1.11

Key Assumptions & Drivers• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth3.97%

Year 3 Revenue Growth4.13%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin16.07%

Terminal EBIT Margin18.53%

Tax Rate27.15%

Historical Capex / Rev1.43%

NWC / Revenue11.91%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance