UTX - Embedded Expectations Analysis - 2019 06 11
United Technologies Corporation (UTX:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 21.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about the HVAC and housing markets, Otis sales growth, and synergies with Collins Aerospace.Specifically, management may be concerned about production bottlenecks, headwinds for Carrier, the HVAC market outlook, and declines in the housing market. Furthermore, they may be exaggerating the fuel savings from their demonstrator program and cost synergies with Collins Aerospace. Also, they may be concerned about Otis' ability to sell elevators, their ability to sustain organic growth, and continue to beat operating profit expectations. In addition, they may lack confidence in their ability to sustain inventory turns improvements in Collins, increase liquidity, and offset negative engine losses.
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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