UTX - Embedded Expectations Analysis - 2019 02 15
United Technologies Corporation (UTX:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with an 18.1x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about their aerospace positioning, Otis and Carrier spin-offs, sales and profit growth, and Rockwell acquisition synergiesSpecifically, management may be concerned about their reliance on their aerospace business, and may be overstating Collins Aerospace Systems' position as a premier systems supplier for large clients. Additionally, they may be concerned about separation costs and timelines related to their Otis and Carrier spin-offs, and may lack confidence in their ability to sustain operating profit growth across all segments. Moreover, they may be downplaying concerns about seasonality and organic growth within their Rockwell acquisition, and may be overstating its synergies with Collins Aerospace. Furthermore, they may lack confidence in their ability to sustain equipment and interiors business growth, and offset cost headwinds at Otis. Finally, they may be concerned about investments into commercial business alternatives, as well as their ability to increase EPS and improve inventory turns
United Technologies provides technology products and services to the building systems and aerospace industries. The company has four segments: Otis, which designs, manufactures, sells and installs passenger and freight elevators; Carrier, which provides heating, ventilating, air conditioning refrigeration, fire, security and building automation products; Pratt & Whitney, which supplies aircraft engines for the commercial, military, business jet and general aviation market; and Collins Aerospace Systems, which provides aerospace products and aftermarket service solutions for aircraft manufacturers, airlines, regional, business and general aviation markets, military, space and undersea operations.
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