Ingersoll Rand Inc. (IR) stock intrinsic value fair value estimate & owner earnings analysis

Ingersoll Rand makes industrial air compressors, pumps, power tools, lifting equipment and other specialized equipment, sold under the Ingersoll Rand, Gardner Denver and other brand names. It reports two segments: Industrial Technologies and Services ($6,056 million of 2025 revenue) and Precision and Science Technologies ($1,595 million). Its installed base generates recurring parts, consumables and service revenue, which was 36.5% of 2025 revenue; the filing notes that a compressor typically lasts 10 to 12 years and needs service at regular intervals throughout. About 42% of revenue comes from the United States, 34% from Europe, the Middle East, India and Africa, and 10% from China, where the company has real operations (China revenue was $789.5 million in 2025). How we measure earnings. We take cash from operations, remove the swings from working capital (receivables, inventories, payables and accruals), subtract stock-based compensation as a real cost, and subtract the portion of capital spending needed just to keep the business running. That gives owner earnings of $1.99 per share in 2021, $2.20 in 2022, $2.75 in 2023, $3.06 in 2024 and $3.32 in 2025. We start the series in 2021, the first full year after the February 2020 combination of Gardner Denver and Ingersoll Rand's industrial business, because earlier years describe a different company. The company adds back about $388 million a year of amortization of acquired intangibles, plus $273 million of 2025 impairments and a $127 million loss on equity investments, mostly a $120.9 million impairment. These are non-cash charges tied to past purchases, so they do not reduce owner earnings. Because they show that some acquired businesses have underperformed, we carry that risk in the bear case instead of adjusting the earnings level. Our starting earnings level is $3.06 per share, the median of 2023 to 2025. We use those three years because they reflect today's scale after the 2023 and 2024 acquisitions, and we leave out 2021 and 2022, when the company was smaller and working capital swung widely (a $344 million cash drain in 2021). We do not use a trailing-twelve-month figure. Owner earnings per share grew 8.5% in 2025 (7.0% in total dollars), and our base case assumes 0% in year one, below that. Why we do not credit growth. All of 2025's revenue growth came from acquisitions ($419.9 million) and currency ($92.0 million); organic revenue fell $96.0 million, and the gross margin slipped from 43.8% to 43.6% on lower volume and tariff-related pricing meant to offset tariff costs one for one. The company acquires businesses every year ($525 million of cash in 2025, $2,959 million in 2024, $963 million in 2023), but we cannot show that these purchases earn much more than the 6% we discount at, so they add little value and we credit none. The 2025 impairments, mostly on businesses acquired with ILC Dover, are the reason for caution. Pricing power, share gains and end-market recovery are also left out, because none is locked in. Base case: $51.0 per share. Owner earnings stay at $3.06 per share indefinitely. What keeps earning power going is the installed base and its recurring service revenue, maintenance-level capital spending of only about 1.7% of revenue, and a business that produced $1.36 billion of operating cash flow in 2025. Nothing is assumed to grow or decay. The value is $3.06 divided by 6%. Bear case: $32.4 per share. The 2025 pattern continues: organic revenue shrinks, cost leverage is unfavorable and margins slip. Owner earnings fall 4% a year for ten years, to about $2.03 per share, then keep falling 2% a year because acquired customer relationships and technology are not replaced by anything we can name. The company also carries $4.78 billion of debt against $1.25 billion of cash, with $702 million maturing in 2027 and $502 million in 2028; interest expense was $254 million in 2025 and is already deducted from the cash flow we start with. Bull case: $75.7 per share. Owner earnings are $3.32 per share, the 2025 level, and grow 4% a year for ten years, then stay flat. This assumes the company keeps using its roughly $1.2 billion of annual operating cash flow less capital spending for acquisitions at returns above 6% and holds its gross margin near 43.6% despite tariffs. That is the same acquisition program that has run every year since 2021, but its returns have not yet been shown to be above our threshold. What could make this wrong. The base case assumes earnings hold flat, and the bear case shows what happens if the 2025 organic decline is a trend. On the other side, the company repurchased about $1.0 billion of its shares in 2025, and our per-share figures use the weighted-average diluted count of 401.0 million; a lower year-end share count would modestly raise them. The impairments, the 30% cushion the company reports for the combined reporting unit that now includes the former Biopharma and Aerospace & Defense units, and the debt maturities are the specific items to watch. The margin-of-safety price is $34 per share, about a third under the base case and just above the bear case, given the leverage, the acquisition track record and the recent organic decline.