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TT Trane Technologies

industrial · valued with opus medium conviction · 2026-09-23

HOLD
wonderful · 87 ▟ wide moat circle of competence: in ✓ would own for a decade trend flat · -2.3% vs 200-DMA
Owner-earnings value$267.47
Price$437.82
Margin of safety -38.9%

Wonderful HVAC franchise with a widening moat, but the price already assumes twice its sustainable growth.

The business

Trane designs, makes, and services HVAC systems and transport refrigeration (Thermo King) for commercial buildings, data centers, homes, and trucks. Revenue comes from equipment sales plus a growing, higher-margin stream of services, parts, controls, and retrofits across a large installed base. Demand is driven by replacement cycles, energy-efficiency regulation, decarbonization, and data-center cooling.

Quality gate · 87/100

Returns on capital 27.3/30
Consistency 20.5/22
Margins / pricing power 10.2/16
Balance sheet 13.4/16
Cash conversion 9.8/10
Capital allocation 5.5/6
Median ROIC21.1%
Gross margin35.4%
Net debt / EBITDA0.7x
FCF conversion96%
Share count / yr-1.1%
Profitable years4/4

Moat & management

Moat ▟ wide moat
Sourcescale
Trajectorywidening
Managementexcellent

Its commercial HVAC leadership rests on scale, a direct sales and service network, engineering specs written around its products, and a large installed base that produces recurring service revenue at high switching cost. Tightening efficiency and refrigerant rules favor scaled incumbents, and data-center thermal management is expanding its franchise.

Management has shed lower-return businesses, turns about 100% of net income into free cash flow, keeps leverage low, and makes disciplined bolt-on acquisitions. Buybacks have been steady (share count down about 1%/yr), though some were done at full valuations.

Owner-earnings inputs

Owner earnings (TTM)3.01B
Owner-earnings yield3.1%
Free-cash-flow yield3.7%
Growth used (normalized)9.0%
Market-implied growth (reverse DCF)17.9%
Terminal growth3.0%
Discount rate (hurdle)10.3%

Projected owner earnings

YrOwner earningsGrowthPV
13.28B 9.0%2.97B
23.56B 8.6%2.92B
33.85B 8.1%2.87B
44.15B 7.7%2.80B
54.45B 7.3%2.72B
64.76B 6.9%2.63B
75.06B 6.4%2.54B
85.36B 6.0%2.44B
95.66B 5.6%2.33B
105.95B 5.1%2.22B
116.24B 4.7%2.11B
126.50B 4.3%1.99B
136.75B 3.9%1.88B
146.98B 3.4%1.76B
157.19B 3.0%1.64B

Key risks

  • Cyclical downturn in commercial construction or a data-center capex pullback compressing volumes and margins
  • Valuation: the price implies about 18% growth, roughly double a durable rate, so the multiple could compress for years
  • Competition in data-center liquid cooling from Vertiv, Carrier, Johnson Controls, and new entrants

Catalysts

  • AI/data-center cooling demand and the refrigerant transition driving an equipment replacement cycle
  • Services mix shift toward recurring revenue lifting margins and earnings stability

Recent news

score · 8 articles

  • GEN vs. TT: Which Stock Is the Better Value Option?
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  • Does Trane Technologies (TT) Trade Below Fair Value on Cash Flow?
  • Advisory Expertise & Specialized Talent Aid CRAI Amid Stiff Rivalry
  • Broad-Based Demand & Talent Investments Aid FCN Amid Stiff Rivalry
  • 2 Profitable Stocks to Target This Week and 1 We Turn Down
  • Trane Technologies (TT) Suffers a Larger Drop Than the General Market: Key Insights

⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Price pays for ~18%/yr owner-earnings growth over 15y (reverse DCF); model credits 9%. · Rich vs our conservative value, but a quality business is not a short — stance is WAIT for a better price, not sell.

History

DateQualityPriceValueMoSRating
2026-10-28 87 $461.07 $267.47 -42.0% HOLD
2026-10-27 87 $455.03 $267.47 -41.2% HOLD
2026-10-26 87 $444.90 $267.47 -39.9% HOLD
2026-10-23 87 $448.80 $267.47 -40.4% HOLD
2026-10-22 87 $471.42 $267.47 -43.3% HOLD
2026-10-21 87 $461.42 $267.47 -42.0% HOLD
2026-10-20 87 $465.04 $267.47 -42.5% HOLD
2026-10-19 87 $458.89 $267.47 -41.7% HOLD
2026-10-16 87 $457.36 $267.47 -41.5% HOLD
2026-10-15 87 $471.29 $267.47 -43.2% HOLD
2026-10-14 87 $478.01 $267.47 -44.0% HOLD
2026-10-13 87 $477.55 $267.47 -44.0% HOLD
2026-10-12 87 $476.98 $267.47 -43.9% HOLD
2026-10-09 87 $469.94 $267.47 -43.1% HOLD
2026-10-08 87 $467.27 $267.47 -42.8% HOLD
2026-10-07 87 $476.39 $267.47 -43.9% HOLD
2026-10-06 87 $470.76 $267.47 -43.2% HOLD
2026-10-05 87 $463.91 $267.47 -42.3% HOLD
2026-10-02 87 $458.94 $267.47 -41.7% HOLD
2026-10-01 87 $451.98 $267.47 -40.8% HOLD
2026-09-30 87 $455.59 $267.47 -41.3% HOLD
2026-09-29 87 $452.06 $267.47 -40.8% HOLD
2026-09-28 87 $454.44 $267.47 -41.1% HOLD
2026-09-25 87 $438.54 $267.47 -39.0% HOLD
2026-09-24 87 $437.09 $267.47 -38.8% HOLD
2026-09-23 87 $437.82 $267.47 -38.9% HOLD
2026-09-22 87 $433.32 $293.48 -32.3% HOLD
2026-09-21 87 $429.11 $293.48 -31.6% HOLD
2026-09-18 87 $423.33 $293.48 -30.7% HOLD
2026-09-17 87 $421.68 $293.48 -30.4% HOLD
2026-09-16 87 $422.73 $293.48 -30.6% HOLD
2026-09-15 87 $426.01 $293.48 -31.1% HOLD
2026-09-14 87 $442.52 $293.48 -33.7% HOLD
2026-09-11 87 $439.83 $293.48 -33.3% HOLD
2026-09-10 87 $444.17 $293.48 -33.9% HOLD
2026-09-09 87 $446.00 $293.48 -34.2% HOLD
2026-09-08 87 $447.90 $293.48 -34.5% HOLD
2026-09-07 87 $447.90 $293.48 -34.5% HOLD
2026-09-04 87 $445.19 $293.48 -34.1% HOLD
2026-09-03 87 $439.02 $293.48 -33.2% HOLD
2026-09-02 87 $440.15 $293.48 -33.3% HOLD
2026-09-01 87 $444.40 $293.48 -34.0% HOLD
2026-08-31 87 $448.96 $293.48 -34.6% HOLD
2026-08-28 87 $454.31 $293.48 -35.4% HOLD
2026-08-27 87 $463.40 $293.48 -36.7% HOLD
2026-08-26 87 $455.25 $293.48 -35.5% HOLD
2026-08-25 87 $452.96 $293.48 -35.2% HOLD
2026-08-24 87 $453.43 $293.48 -35.3% HOLD
2026-08-21 87 $451.10 $293.48 -34.9% HOLD
2026-08-20 87 $455.48 $293.48 -35.6% HOLD
2026-08-19 87 $463.37 $293.48 -36.7% HOLD
2026-08-18 87 $480.20 $293.48 -38.9% HOLD
2026-08-17 87 $480.20 $293.48 -38.9% HOLD
2026-08-14 87 $477.69 $293.48 -38.6% HOLD
2026-08-13 87 $478.55 $293.48 -38.7% HOLD
2026-08-12 87 $483.96 $293.48 -39.4% HOLD
2026-08-11 87 $476.99 $293.48 -38.5% HOLD
2026-08-10 87 $482.31 $293.48 -39.2% HOLD
2026-08-07 87 $478.66 $293.48 -38.7% HOLD
2026-08-06 87 $483.58 $293.48 -39.3% HOLD
2026-08-05 87 $472.24 $293.48 -37.9% HOLD
2026-08-04 87 $454.95 $293.48 -35.5% HOLD
2026-08-03 87 $454.95 $293.48 -35.5% HOLD
2026-07-31 87 $440.28 $293.48 -33.3% HOLD
2026-07-30 87 $446.80 $293.48 -34.3% HOLD
2026-07-29 87 $483.34 $293.48 -39.3% HOLD
2026-07-28 87 $483.34 $293.48 -39.3% HOLD
2026-07-27 87 $479.71 $293.48 -38.8% HOLD
2026-07-24 87 $479.71 $293.48 -38.8% HOLD
2026-07-23 87 $473.60 $293.48 -38.0% HOLD
2026-07-22 87 $469.89 $293.48 -37.5% HOLD
2026-07-21 87 $468.16 $293.48 -37.3% HOLD
2026-07-20 87 $469.98 $293.48 -37.6% HOLD
2026-07-17 87 $475.00 $293.48 -38.2% HOLD
2026-07-16 87 $480.20 $293.48 -38.9% HOLD
2026-07-15 87 $479.90 $293.48 -38.8% HOLD
2026-07-14 87 $479.90 $293.48 -38.8% HOLD
2026-07-13 87 $479.70 $293.48 -38.8% HOLD
2026-07-10 87 $472.00 $293.48 -37.8% HOLD
2026-07-09 87 $472.29 $293.48 -37.9% HOLD
2026-07-08 87 $475.74 $293.48 -38.3% HOLD
2026-07-07 87 $487.24 $293.48 -39.8% HOLD
2026-07-06 87 $478.13 $293.48 -38.6% HOLD
2026-07-03 87 $478.13 $293.48 -38.6% HOLD
2026-07-02 87 $484.58 $293.48 -39.4% HOLD
2026-06-25 87 $483.15 $265.10 -45.1% STRONG SELL
2026-06-23 87 $474.34 $261.49 -44.9% STRONG SELL