Trane Technologies plc (TT)
Company Description
Trane Technologies TT 0.00%↑ is a global leader in climate solutions, specializing in heating, ventilation, air conditioning (HVAC), and refrigeration systems for commercial, residential and transport applications. The company is headquartered in Swords, Ireland (great city name!), and was originally founded in 1885. It was acquired by Ingersoll-Rand in 2008, then spun off into its own publicly traded company in 2020, beginning to trade under the symbol TT. This HVAC giant boasts a market cap just shy of $75B and has delivered a total return of more than 625% over the past decade, resulting in a CAGR of nearly 22%.
Also, check out some tools to help with your investing journey:
Follow on other platforms:
Quality Financial Metrics
Next, let’s take a look at some key financial metrics to determine whether TT is a high-quality company. As always, I’m looking for growing revenue, a stable or expanding gross profit margin, and a robust return on invested capital.
The revenue per share (RPS) numbers prior to 2020 reflect the pre-spin-off era, while 2020 onward reflects the post-spin-off performance. Since the spin-off, RPS has grown impressively. In the first two years, it increased by 14.2% and 16.1%, respectively. FY23 and FY24 followed suit with increases of 12.5% and 13.4%, giving the company an average RPS growth rate of slightly over 14% since 2020. TT also has a share buyback program, reducing its net shares outstanding by 1.5% annually since the spin-off.
The gross profit margin (GPM) tells a similar story. There was a noticeable jump in 2021, a slight dip in 2022 to 31%, and then record-setting margins over the last two fiscal years at 33.1% and 35.7%. These improvements indicate strong pricing power and increasing operational efficiencies.
Last but not least is return on invested capital (ROIC), which has also consistently improved since the spin-off, climbing from 12.6% to 18.5% over the past four years. Like the GPM, this trend suggests more efficient operations and smart capital allocation decisions by management.
Clearly, TT has thrived since its separation from Ingersoll-Rand. All three metrics—RPS, GPM, and ROIC—are trending in the right direction, and management appears to be making all the right moves.
Dividend Data
As an independent entity, TT has a short four-year dividend history, during which it has increased its dividend by about 12% annually. The company currently pays a quarterly dividend of $0.94 per share, equating to an annual payout of $3.76 and a dividend yield of 1.14%. The payout ratio has declined each year since the spin-off and now sits just below 30%. While the dividend history is relatively short, the double-digit increases and declining payout ratio suggest a promising future for income-focused investors.
Potential Headwinds
As a global company, TT faces a variety of risks. Here are a few potential challenges:
Tariffs: The most immediate concern is the current tariff situation. However, according to the most recent earnings call, Trane Technologies employs a long-standing “in-region for-region” manufacturing strategy, with production facilities in each region they serve. This helps reduce exposure to tariffs by minimizing cross-border supply chain reliance. Management also noted they are prepared to act quickly to preserve margins and adapt to cost fluctuations if tariffs are imposed.
Acquisition Risk: TT is also active on the acquisition front. While this can drive growth, it carries risks—such as overpaying or poor integration. Over the past three years, the company has made several acquisitions, including AL-KO Air Technology (Oct. 2022), MTA S.p.A (May 2023), Nuvolo Technologies (Nov. 2023), Klinge Corporation (Aug. 2024), and BrainBox AI (Dec. 2024/Jan. 2025). To be fair, TT has shown solid judgment so far, but this is still an area worth monitoring.
Upcoming Earnings
TT is set to report its next earnings on April 30th. The company has a solid track record, beating EPS estimates in 13 of the past 14 quarters and only missing revenue once.
In its most recent report (January 30th, 2025), TT beat EPS estimates by $0.14 and revenue by $91.07M. For Q1 2025, analysts expect EPS of $2.20 and revenue of $4.46B, representing YoY increases of 13.4% and 5.7%, respectively.
While these numbers are strong, the bigger focus will likely be on management’s commentary around tariffs and other potential headwinds rather than just Q1 results.
Quality At A Fair Price is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.