Core Insights - Trane Technologies (TT) is expected to report quarterly earnings of $2.82 per share, reflecting an 8.1% increase year-over-year, with revenues projected at $5.08 billion, a 4.2% increase from the previous year [1] Earnings Estimates - The consensus EPS estimate has been revised downward by 1.4% in the last 30 days, indicating a reassessment by analysts [2] - Revisions to earnings projections are crucial for predicting investor behavior and stock price performance [3] Revenue Projections - Analysts project 'Net Revenues- Americas' to reach $3.98 billion, marking a 4.7% increase year-over-year [5] - 'Net Revenues- EMEA' is expected to be $747.10 million, reflecting an 8.2% increase from the prior year [5] - 'Net Revenues- Asia Pacific' is forecasted at $362.67 million, indicating a 4.9% decrease year-over-year [5] Bookings and EBITDA Estimates - 'Total Bookings' are anticipated to be $4.98 billion, compared to $4.66 billion in the same quarter last year [6] - The consensus estimate for 'Adjusted EBITDA- Americas' is $789.68 million, up from $741.40 million year-over-year [6] - 'Adjusted EBITDA- EMEA' is projected at $133.88 million, an increase from $130.40 million in the previous year [6] - 'Adjusted EBITDA- Asia Pacific' is expected to be $91.63 million, down from $100.90 million year-over-year [7] Stock Performance - Trane Technologies shares have decreased by 1.6% over the past month, while the Zacks S&P 500 composite has increased by 0.2% [7] - The company holds a Zacks Rank 3 (Hold), suggesting it is expected to closely follow overall market performance in the near term [7]

Core Viewpoint - Trane, a strategic brand under Trane Technologies, has launched the DCDA series cooling liquid distribution units (CDUs) specifically designed for data centers in the Asia-Pacific region, addressing the challenges of heat dissipation in high-density computing environments [1][3]. Group 1: Product Features - The DCDA series is the first self-developed liquid cooling product by Trane tailored for the Asia-Pacific market, offering high system flexibility, excellent energy efficiency, and strong integration capabilities [1][3]. - The product features a compact design that matches server cabinets, supporting both "In-Row" and "In-Room" layouts, which can save up to 20% of data center floor space [3][4]. - It includes a modular platform design that allows for various sensor options to monitor and adjust the cooling liquid's status, ensuring optimal performance [4]. Group 2: Performance and Efficiency - The DCDA series offers three models with cooling capacities of 400kW, 800kW, and 1350kW, with customization options extending up to 1700kW, catering to the needs of large data centers [6]. - The system can achieve a Power Usage Effectiveness (PUE) as low as 1.1, significantly reducing overall energy consumption and providing substantial operational cost savings [6][5]. Group 3: Market Position and Recognition - The launch of the DCDA series marks a significant milestone in Trane's strategy to penetrate the high-growth data center market in the Asia-Pacific region [3][7]. - The product has already received widespread market attention and secured initial orders in China, with deliveries expected in the first quarter of 2026, indicating strong market recognition of Trane's liquid cooling technology [7].

Core Insights - Fenimore Asset Management's Q4 2025 investor letter indicates a solid yet volatile stock market, influenced by AI enthusiasm, economic uncertainty, and monetary policy concerns [1] - The firm anticipates mixed market conditions in 2026, with many AI-related stocks appearing expensive while high-quality companies are trading at multi-year lows, presenting potential investment opportunities [1] Performance Summary - The S&P 500 Index rose by 2.66% in Q4 2025, with large-cap technology and communication services sectors leading the market [1] - Fenimore Small Cap Strategy returned -4.12%, underperforming the Russell 2000 Index, which returned 2.19% [1] - Fenimore Dividend Focus Strategy declined by -4.41% compared to the Russell Midcap Index's 0.16% return [1] - Fenimore Value Strategy saw a decline of -1.17% in Q4, also underperforming against the Russell Midcap Index [1] Company Focus: Trane Technologies plc - Trane Technologies plc (NYSE:TT) was highlighted as a key performance detractor in the Fenimore Dividend Focus Strategy [2] - As of January 15, 2026, Trane Technologies plc's stock closed at $387.27, with a one-month return of -0.66% and a 52-week loss of 0.49% [2] - The company has a market capitalization of $86.174 billion [2] - Despite challenges in the residential HVAC business due to industry changes, Trane Technologies plc's earnings and backlog remain strong, with AI data center cooling contributing positively [3]

Core Insights - Trane Technologies (TT) has a Growth Score of B, indicating a solid quality and sustainability of its growth [1] - The company's earnings for the fourth quarter of 2025 are projected to increase by 8% year over year, with earnings expected to rise by 16.1% in 2025 and 13.5% in 2026 [1][9] - Revenues are anticipated to grow by 7.1% in 2025 and 7.4% in 2026 [1][9] Market Drivers - The commercial HVAC market primarily drives Trane Technologies' business, supported by favorable government policies in the U.S. and Europe that enhance demand for energy-efficient products and decarbonization efforts [2][9] - The acquisition of Brainbox AI significantly enhances HVAC services, enabling measurable reductions in energy consumption and improvements in sustainability [3][9] Regional Performance - The Collective International HVAC business is performing well, with notable growth in EMEA and Asia, particularly in China [4] - The company's expert workforce in direct sales and service teams provides a competitive edge in capturing growth opportunities across various markets [4] Financial Health - Trane Technologies' current ratio improved to 1.21 in Q3 2025 from 1.1 in Q2 2025, indicating better liquidity due to increased cash reserves [5] - A current ratio above 1 suggests the company can efficiently meet short-term obligations [5] Competitive Landscape - The company faces competition from major players like Honeywell International, Siemens, Carrier, and Daikin Industries, which complicates the balance between growth and profitability [6] - Rising commodity prices, particularly for steel and non-ferrous metals, add to the challenges of maintaining cost efficiency while innovating [6]

Core Viewpoint - Trane Technologies (TT) is positioned well to continue its trend of beating earnings estimates, supported by a solid history of performance and positive earnings expectations [1][5]. Earnings Performance - In the most recent quarter, Trane Technologies reported earnings of $3.88 per share, exceeding the expected $3.80 per share, resulting in a surprise of 2.11% [2]. - For the previous quarter, the company also surpassed expectations, reporting $3.88 per share against a consensus estimate of $3.76 per share, achieving a surprise of 3.19% [2]. Earnings Estimates and Predictions - There has been a favorable change in earnings estimates for Trane Technologies, with a positive Zacks Earnings ESP (Expected Surprise Prediction) indicating potential for another earnings beat [5][8]. - The current Earnings ESP for Trane Technologies is +0.54%, suggesting that analysts have recently become more optimistic about the company's earnings prospects [8]. Zacks Rank and Success Rate - The stock holds a Zacks Rank of 3 (Hold), which, when combined with a positive Earnings ESP, indicates a high likelihood of beating consensus estimates, with a success rate of nearly 70% for stocks with this combination [6][8].

Group 1 - Melius Research analyst Scott Davis upgraded Trane (TT) to Buy from Hold with a price target of $490, influenced by recent comments from Nvidia (NVDA) regarding future cooling architectures [1] - The analyst believes that the current applied HVAC "supercycle" is driven by factors that extend beyond just data centers, indicating a broader market potential for cooling suppliers [1] - Johnson Controls (JCI) was also upgraded to Buy based on similar reasoning regarding the HVAC market dynamics [1]

Core Viewpoint - Trane Technologies plc will host a conference call to discuss its fourth quarter 2025 financial results on January 29, 2026, at 10 a.m. ET [1] Group 1 - The company will issue its fourth quarter earnings release and earnings presentation prior to the call [1] - Both documents will be available on the Trane Technologies website [1] - A real-time, listen-only webcast of the conference call will be broadcast live over the internet [1]

Summary of Key Points from the Conference Call Industry Overview - The discussion centers around the HVAC (Heating, Ventilation, and Air Conditioning) industry and liquid cooling technologies, particularly in relation to NVIDIA's new Vera Rubin chip platform [1][2]. Core Insights 1. **Advancements in Liquid Cooling**: NVIDIA's CEO announced that the new Vera Rubin chips can be cooled using liquid cooling systems instead of traditional water chillers, which has implications for HVAC OEMs [1]. 2. **Market Reaction**: Following the announcement, HVAC OEMs such as Johnson Controls (JCI), Trane Technologies (TT), and Carrier Global (CARR) experienced a sell-off, while liquid cooling companies like nVent Electric (NVT) and Vertiv (VRT) saw modest gains [1]. 3. **Continued Need for Traditional Chillers**: Despite the advancements, traditional chillers remain essential for cooling data centers, especially during peak temperature days, indicating that the sell-off of HVAC OEMs may have been unwarranted [2]. 4. **Collaboration with Chip Manufacturers**: HVAC OEMs are actively collaborating with chip manufacturers on next-generation technology roadmaps, exemplified by TT's partnership with NVIDIA on a thermal management system for AI infrastructure [2]. 5. **Future of Liquid Cooling**: The need for advanced liquid cooling technologies is expected to grow as next-generation chips will have significantly higher compute capacities, necessitating continued innovation in cooling solutions [2]. 6. **Two-Phase Cooling Adoption**: The CES announcement may accelerate the adoption of two-phase cooling technologies, which are anticipated to be more energy-efficient than current single-phase systems [2]. 7. **Investment Activity**: JCI's investment of approximately $25 million in Accelsius, a leader in dual-phase cooling, highlights the industry's shift towards more advanced cooling solutions [2]. Additional Considerations 1. **Short-Term Market Volatility**: The industry has seen several short-term sell-offs due to new technology developments, which have historically provided "buy the dip" opportunities for investors [2][6]. 2. **Earnings Outlook**: The upcoming 4Q earnings reports are expected to address the resilience and growth potential of both HVAC OEMs and liquid cooling companies, which could influence market sentiment [2]. 3. **Valuation and Risks**: - nVent Electric (NVT) is rated as a Buy with a 12-month price target of $145, based on a multiple of 21.0x EBITDA [10]. - Vertiv (VRT) is also rated as a Buy with a price target of $204, based on a multiple of 23x EBITDA [11]. - Carrier Global (CARR) and Johnson Controls (JCI) are rated as Buy with price targets of $68 and $137, respectively, while Trane Technologies (TT) is rated Neutral with a price target of $458 [13][15][16]. Conclusion - The developments at CES 2026 signal a transformative period for the HVAC and liquid cooling industries, with significant implications for market dynamics and investment opportunities. The ongoing collaboration between HVAC OEMs and chip manufacturers, along with advancements in cooling technologies, will be critical in shaping the future landscape of the industry [2].

Core Viewpoint - Trane Technologies plc is a leader in climate innovation, focusing on sustainable solutions for buildings, homes, and transportation, competing with major players like Carrier Global Corporation and Johnson Controls International [1] Stock Performance and Analyst Ratings - On January 7, 2026, Scott Davis from Melius Research set a price target of $490 for Trane Technologies, indicating a potential upside of 28.58% from the current trading price of $381.10 [2][5] - The stock recently opened at $367.12 following a downgrade by UBS Group, which lowered its price target from $544 to $520 but maintained a buy rating [2] - The stock last traded at $362.73 with a trading volume of 462,873 shares, and other analysts have also provided updated views on the stock [3] - The Royal Bank of Canada increased its price target from $467 to $469, maintaining a "sector perform" rating, while Bank of America upgraded the stock from "neutral" to "buy," raising its target price from $490 to $550 [3] - Barclays adjusted its price target from $485 to $495, giving it an "overweight" rating [3][5] Current Stock Metrics - Trane Technologies' current price of $381.10 reflects a decrease of 2.52% or $9.87, with intraday fluctuations between a low of $348.06 and a high of $383.26 [4] - Over the past year, the stock has reached a high of $476.19 and a low of $298.15, with a market capitalization of approximately $84.5 billion and a trading volume of 4,318,000 shares on the NYSE [4]

Core Viewpoint - Nvidia CEO Jensen Huang's remarks at CES 2026 have significantly impacted the stock market, leading to a surge in storage-related stocks while causing declines in data center cooling stocks [1][2]. Group 1: Storage Stocks Surge - SanDisk's stock price soared nearly 28% to $349.63 per share, reaching a market cap of $51.24 billion, marking a tenfold increase since February of the previous year [2][4]. - Huang emphasized the untapped potential of the storage market, predicting it could become the largest global storage market to support AI workloads, with current demand exceeding existing infrastructure capabilities [4]. - Other storage companies like Western Digital, Seagate, and Micron also saw significant stock price increases, with Western Digital up 16.77% to $219.38, Seagate up 14% to $330.42, and Micron up 10% to $343.43, all achieving double-digit percentage gains [6][7]. Group 2: AI-Driven Hardware Spending - The growth in AI training and inference demand is leading to tight memory supply and rising prices, boosting digital storage stocks [12]. - Analysts predict that companies will retain more data for training, analysis, and compliance, driving a surge in storage demand, particularly in sectors like drones, surveillance, and automotive technology [14]. - The focus on AI investment has shifted towards hardware spending, with expectations that AI inference will dominate beyond 2026 [14]. Group 3: Cooling Stocks Decline - Huang's comments raised concerns about the demand for data center cooling products, leading to declines in cooling-related stocks [15]. - Johnson Controls' stock fell 6.24%, Modine Manufacturing dropped 7.46%, and Trane Technologies decreased by 2.52%, with significant intraday losses [15][19]. - Analysts noted that the shift towards liquid cooling technology could impact traditional cooling systems, although some believe the recent sell-off may be excessive [21].