Shares of industrial machinery maker Ingersoll Rand surged nearly 7% on Thursday even as the S&P 500 slipped slightly, and the move had little to do with the company did.
There were no analyst updates or company news to explain the rally. Instead, the gains came after strong second-quarter results from Atlas Copco, a Swedish machinery maker and close competitor.
Atlas Copco reported second-quarter sales of about 45 billion Swedish krona, which is 9% higher than last year and above Wall Street’s estimate of 44 billion krona. Orders grew even more, rising 27% to around 51 billion krona. The company said demand for its equipment and services grew strongly during the quarter, with orders beating expectations. It also expects these trends to continue.
Ingersoll Rand and Atlas Copco both make compressors, pumps, and similar equipment used in factories around the world. Because they compete in many of the same markets, Atlas Copco’s results are often seen as an indicator of demand for Ingersoll Rand’s products too.
Atlas Copco shares went up about 4% in overseas trading, adding to a 22% gain over the past year. In contrast, Ingersoll Rand shares are down about 2% over the same time, so the stock has some catching up to do.
Looking at valuation, Ingersoll Rand trades at about 23 times its expected earnings for the next year, while Atlas Copco trades at around 30 times.
