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United Technologies Remains Well Poised for Healthy Growth
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On Mar 3, Zacks Investment Research updated the research report on diversified conglomerate, United Technologies Corporation .
Headquartered in Hartford, CT, United Technologies serves various end markets such as aerospace, defense and commercial construction, which move according to their own cycles. This business mix and diversification allows the company to remain profitable even during tough economic times, delivering consistent earnings and dividend growth. United Technologies also has a strong aftermarket business. The company not only manufactures and sells primary products such as elevators, aircraft engines and helicopters, but also sells spare parts and offers related services. The company’s aftermarket services business is relatively stable compared to new product delivery, and it helps offset the negative impact of downturns in the new products market. United Technologies has also revamped its aerospace unit by overhauling its organizational structure along with some key changes in the leadership positions within it. It anticipates that the streamlined organizational set up would enable it to better serve its customers.
Recently, Carrier, an operating unit of United Technologies collaborated with AT&T Inc. (T - Free Report) to incorporate the latter’s wireless connectivity on commercial HVAC (heating, ventilation and air conditioning) equipment in its Smart Service solution. This collaboration will help enhance Carriers’ services for its customers. It will be well placed to provide facility managers the capability to make more informed maintenance decisions. By using AT&T’s IoT (Internet of Things) technology, Smart Service will be able to curb energy and maintenance expenses of clients. A higher demand for such innovative products will likely boost the company’s revenues going forward.
United Technologies outperformed the Zacks categorized Diversified Operations industry with an average return of 5.7% compared with 4.2% gain for the latter, over a period of 90 days. The company generates strong free cash flow through a disciplined capital deployment strategy. The cash flow allows management the opportunity to invest in product innovations, acquisitions and business development. The company continues to invest in innovative products through higher engineering spend, delivering value to its customers and securing orders that will drive top-line growth in the future. Also the company expects to witness revenue synergies from the acquisitions of Goodrich and IAE in the long term. All these augur well for its long-term growth.
However, with over 8,000 employees, United Technologies has a considerable presence in the U.K. The company is susceptible to high operating risks following the Brexit referendum. Fluctuations in foreign currency exchange rates also affect the company’s net investment in foreign subsidiaries and may cause instability in cash flows related to foreign denominated transactions. These undermine its long-term growth to some extent.
In addition, the company relies on suppliers, including third-party contract manufacturing and commodity markets to secure raw materials, parts, components and sub-systems. This exposes the company to market price volatility and availability risks. A disruption in deliveries from suppliers, supplier capacity constraints, contract manufacturer production disruptions, price changes, or decreased availability of raw materials or commodities could have a material adverse effect on its ability to meet delivery schedules and increases operating costs. These headwinds look all the more potent with the strengthening of the U.S. dollar.
United Technologies currently carries a Zacks Rank #3 (Hold).
Barloworld has a long-term earnings growth expectation of 18.70% and is currently trading at a forward P/E of 11.04x.
Hitachi has a long-term earnings growth expectation of 13% and is currently trading at a forward P/E of 13.74x.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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United Technologies Remains Well Poised for Healthy Growth
On Mar 3, Zacks Investment Research updated the research report on diversified conglomerate, United Technologies Corporation .
Headquartered in Hartford, CT, United Technologies serves various end markets such as aerospace, defense and commercial construction, which move according to their own cycles. This business mix and diversification allows the company to remain profitable even during tough economic times, delivering consistent earnings and dividend growth. United Technologies also has a strong aftermarket business. The company not only manufactures and sells primary products such as elevators, aircraft engines and helicopters, but also sells spare parts and offers related services. The company’s aftermarket services business is relatively stable compared to new product delivery, and it helps offset the negative impact of downturns in the new products market. United Technologies has also revamped its aerospace unit by overhauling its organizational structure along with some key changes in the leadership positions within it. It anticipates that the streamlined organizational set up would enable it to better serve its customers.
Recently, Carrier, an operating unit of United Technologies collaborated with AT&T Inc. (T - Free Report) to incorporate the latter’s wireless connectivity on commercial HVAC (heating, ventilation and air conditioning) equipment in its Smart Service solution. This collaboration will help enhance Carriers’ services for its customers. It will be well placed to provide facility managers the capability to make more informed maintenance decisions. By using AT&T’s IoT (Internet of Things) technology, Smart Service will be able to curb energy and maintenance expenses of clients. A higher demand for such innovative products will likely boost the company’s revenues going forward.
United Technologies outperformed the Zacks categorized Diversified Operations industry with an average return of 5.7% compared with 4.2% gain for the latter, over a period of 90 days. The company generates strong free cash flow through a disciplined capital deployment strategy. The cash flow allows management the opportunity to invest in product innovations, acquisitions and business development. The company continues to invest in innovative products through higher engineering spend, delivering value to its customers and securing orders that will drive top-line growth in the future. Also the company expects to witness revenue synergies from the acquisitions of Goodrich and IAE in the long term. All these augur well for its long-term growth.
However, with over 8,000 employees, United Technologies has a considerable presence in the U.K. The company is susceptible to high operating risks following the Brexit referendum. Fluctuations in foreign currency exchange rates also affect the company’s net investment in foreign subsidiaries and may cause instability in cash flows related to foreign denominated transactions. These undermine its long-term growth to some extent.
In addition, the company relies on suppliers, including third-party contract manufacturing and commodity markets to secure raw materials, parts, components and sub-systems. This exposes the company to market price volatility and availability risks. A disruption in deliveries from suppliers, supplier capacity constraints, contract manufacturer production disruptions, price changes, or decreased availability of raw materials or commodities could have a material adverse effect on its ability to meet delivery schedules and increases operating costs. These headwinds look all the more potent with the strengthening of the U.S. dollar.
United Technologies currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
A couple better-ranked stocks in the industry include Barloworld Limited (BRRAY - Free Report) and Hitachi, Ltd. (HTHIY - Free Report) . Both these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Barloworld has a long-term earnings growth expectation of 18.70% and is currently trading at a forward P/E of 11.04x.
Hitachi has a long-term earnings growth expectation of 13% and is currently trading at a forward P/E of 13.74x.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>