Trane Technologies PLC, based in the US, focuses on the design, production, and marketing of air conditioning systems, including heating, ventilation, and air conditioning (HVAC) solutions, primarily under the Trane and Thermo King brands. The company also offers temperature control equipment, such as refrigeration systems and controlled-temperature transportation devices. The group has over 19,000 employees.
Trane Technologies operates through three reportable segments, with net sales divided into equipment sales (67.1%) and services and spare parts sales (32.9%). The Americas segment, which serves customers in North America and Latin America, includes commercial heating, cooling, and ventilation systems, building controls and solutions, energy services and solutions, residential heating and cooling, and transport refrigeration systems and solutions. This segment generated 80% of the company's net revenues in 2024.
The EMEA segment caters for customers in Europe, the Middle East, and Africa, offering heating, cooling, and ventilation systems, services and solutions for commercial buildings, and transport refrigeration systems and solutions, contributing 13% to net revenues in 2024. Finally, the Asia-Pacific segment, which serves customers across the Asia Pacific region, provides heating, cooling, and ventilation systems, services and solutions for commercial buildings, and transport refrigeration systems and solutions, accounting for 7% of net revenues in 2024.
Portfolio enhancement
On June 10, 2025, Trane Technologies expanded its liquid cooling portfolio to enhance thermal management systems for data centers. The new scalable Coolant Distribution Unit (CDU) solutions, ranging from 2.5MW to 10MW, offer increased cooling capacity and energy efficiency for hyperscale and colocation data centers. Steve Obstein, Vice President and General Manager of Data Centers & High-Tech, highlighted the company's commitment to co-innovating with customers to design custom thermal management systems that support sustainable growth.
The scalable platform complements Trane's existing 1MW CDU, providing flexible cooling for high-density computing environments. This approach helps data centers manage growth without overhauling their cooling infrastructure, reducing energy consumption, operational costs, and carbon footprints. Trane also offers world-class service, a network of qualified technicians, and Smart Service options for proactive monitoring and predictive maintenance.
Rising ROE
Trane Technologies posted a solid revenue CAGR of 12% over FY 21-24, reaching $19.8bn. Operating income surged at a CAGR of 19.7% over the same period, reaching $2.5bn in FY 24, with margins expanding from 14.5% to 17.5%. Net income therefore rose at a CAGR of 21.7% to $2.6bn in FY 24.
Cash from operations increased from $1.6bn to $3.2bn over the same period. Total debt rose, albeit at a lower rate from $5.3bn to $5.4bn in FY 24. Debt to equity of the company improved from 84.3% to 71.9%. In addition, ROE also increased from 23% in FY 21 to 36% in FY 24.
On the other hand, Carrier Global Corporation, a local peer, reported a lower revenue CAGR of 2.9% over the past three years, reaching $22.5bn in FY 24. Operating income dropped at a CAGR of minus 3.2% to $2.3bn in FY 24.
Looking ahead, analysts anticipate revenue CAGR of 7.5% over FY 24-27, reaching $24.7bn. Operating income CAGR of 10.6% to $4.7bn, with margins expanding by 156bp to 19.1% in FY 27. In addition, analysts estimate a net profit CAGR of 11.3% to $3.5bn with margins expanding by 141bp to 14.4% in FY 27, with EPS expected to increase to $16.1 in FY 27 from $11.4 in FY 24. Likewise, analysts estimate EBIT CAGR of 8.8% but net profit to drop by CAGR of minus 19.8% for Carrier Global.
Impressive stock returns
Over the past one year, the company's stock has delivered robust returns of approximately 25.6%, reflecting a positive fundamental trajectory. In comparison, Carrier Global delivered lower returns of about 12.1%.
Trane Technologies is currently trading at a P/E of 32.3x, based on the FY 25 estimated EPS of $13, which is higher than its 3-year historical average of 27.4x and that of Carrier Global (29.2x). Likewise, in terms of EV/EBIT, the company is currently trading at 24.5x, based on the FY 25 estimated EBIT of $3,921m, which is higher than its 3-year historical average of 21x and Carrier Global’s valuation of 17.9x.
Trane Technologies is liked by about half of the 24 analysts who monitor it; seven have ‘Buy’ ratings, seven have ‘Outperform’ ratings, while 15 have ‘Hold’ ratings for an average target price of $418.9. However, the recent run-up in its share price means that the target price has already been reached, implying only limited upside potential. However, any correction in the near term could provide a decent potential buy opportunity for investors.
Overall, the company has shown impressive growth and strong fundamentals, driven by strategic enhancements and innovative offerings. Trane Technologies remains a solid player in the HVAC and temperature control industry. However, Trane Technologies’ business is subject to a variety of risks and uncertainties, including market and economic risks, including capital market volatility, supply chain disruptions, and climate-related challenges. In addition, technological risks such as cybersecurity threats and the pressure to innovate pose significant challenges to maintain competitiveness and operational integrity.
