Trane Technologies is scored 84 for moat and 99 for management. The management score rests on a return on invested capital of 20.3% and a gross margin of 36.2% — figures that describe a business turning capital into profit efficiently. Debt sits at 0.54x equity.
Three independent anchors set the price worth paying. Growth is modelled at 11.4% a year, the rate measured from the filings. The exit multiple assumed is 22.7x. That produces an intrinsic value of $216.95, a 10-CAP price of $170.47 and a payback time price of $228.02, with the value zone set at the highest of the three, $228.02. Today's price of $458.94 is 101% above it.
The operating figures describe a business performing at a high level; the price asks for that performance to continue and then some. A margin of safety score of 24 is the measure of how little room that leaves for being wrong.
| Price | $458.94 |
| Market cap | $101.0B |
| P/E ratio | 34.8x |
| Return on invested capital | 20.3% |
| Gross margin | 36.2% |
| Debt to equity | 0.54x |
| Free cash flow yield | 3.2% |
| Growth rate used | 11.4% |
| Growth rate measured | 11.0% |
| Exit multiple assumed | 22.7x |
| Company | Moat | Buy price |
| Emerson Electric (EMR) | 39 | $64.08 |
| Parker Hannifin (PH) | 92 | $370.46 |
| Illinois Tool Works (ITW) | 33 | $106.31 |
| Cummins (CMI) | 77 | $359.36 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Trane Technologies rather than accepting ours.