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Ingersoll Rand Inc. (IR) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Ingersoll Rand Inc. (IR)

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Intrinsic Value (DCF)

Current$85.83
→
Intrinsic$99.83
+16%
$65.27$99.83$165.39
Market implies 21% growth for 5 years
IR shows 16% potential upside using 25% growth — reasonable if fundamentals hold.
At $86, the market prices in continued strong cash flow growth (21%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $65 → Bull $165. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →21%23%25%27%
8%$125$136$147$159
10%$85$92$100$108
12%$63$68$74$80
14%$49$53$57$62

Bull Case

  • Bull case ($165) offers 93% upside at 30% growth, 9% discount
  • 14% margin of safety vs. base case estimate
  • Market-implied growth (21%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($65) implies 24% downside at 20% growth, 12% discount
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$1.56B
Year 2$1.95B
Year 3$2.44B
Year 4$3.05B
Year 5$3.81B
Terminal$56.02B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.25BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is IR stock undervalued or overvalued?
🟡 FAIRLY VALUED

IR trades at $85.83, within 10% of our $81.25 intrinsic value estimate. At 10.0% WACC and 25.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $50.38 (bear) to $126.70 (bull).

What is IR's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.25B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $3.44B net debt and dividing by 0.41B shares: Bear $50.38 | Base $81.25 | Bull $126.70. Current price $85.83 implies -3% to base case.

How is IR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($36.52B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.