NEW YORK (Reuters) — Diversified Bermuda-based manufacturer Ingersoll-Rand Co. Ltd. posted better-then-expected quarterly earnings yesterday despite falling demand in the US home building industry and higher raw material costs.The company also cheered investors by forecasting 2007 earnings in line with Wall Street expectations, sending its shares up 3.3 percent.

“The good news is that Ingersoll has ‘endorsed’ the consensus for 2007, although, in our view, its exposure to US residential construction presents the key risk to the company’s earnings outlook,” Merrill Lynch analyst Andrew Obin wrote in a research note.

Profit from continuing operations in the fourth quarter was 74 cents per share, a penny better then the average forecast of analysts polled by Reuters Estimates.

Net earnings fell 24 percent to $222 million, or 72 cents per share, from $291.6 million, or 87 cents per share, a year earlier.

Revenue rose 7 percent to $2.89 billion, topping an average Wall Street forecast of $2.78 billion.

Four of Ingersoll’s five divisions reported higher sales and operating profit in the quarter. But its compact vehicle segment, which includes Bobcat machines used in construction, reported a 12 percent sales decline and a 62 percent drop in operating profit, reflecting an “ongoing contraction” in the North American market for compact equipment, the company said.

Ingersoll, whose products also include road paving machines, Schlage locks and Hussman equipment used in grocery stores, said it expects residential construction markets to remain weak in the first quarter, followed by a slow recovery later in the year.

It forecast first-quarter earnings from total operations of 65 cents to 70 cents per share, and full-year earnings from total operations of $3.50 to $3.60 per share.

Analysts on average expect 76 cents a share for the first quarter and $3.55 for the year, according to Reuters Estimates.

Ingersoll estimated 2007 sales growth at 4 percent to 5 percent.

Industrial companies like Ingersoll face “very tough comparisons” in the first quarter with strong results a year ago, said Longbow Research analyst Eli Lustgarten.

“Whatever was hurting you in the fourth quarter doesn’t get a lot better in the first,” Lustgarten said.