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Why Is Carrier Global (CARR) Up 5.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Carrier Global (CARR - Free Report) . Shares have added about 5.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Carrier Global due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Carrier Q4 Earnings Match Estimates
Carrier Global reported fourth-quarter 2022 adjusted earnings of 40 cents per share, which came in line with the Zacks Consensus Estimate. The figure decreased by 9.1% year over year.
Net sales of $5.1 billion surpassed the Zacks Consensus Estimate of $5.08 billion. However, the figure decreased by 1% year over year.
Softness in the Refrigeration and Fire & Security segments led to a year-over-year decline in the top line.
Nevertheless, the company witnessed strong momentum across the HVAC segment.
Product sales (88.7% of net sales) of $4.53 billion increased 6.4% year over year. Service sales (11.3% of net sales) of $578 million were down 34.1% year over year.
Segment Details
HVAC revenues (65% of net sales) increased 21% year over year to $3.32 billion. Residential sector strength in North America drove growth. Also, well-performing light commercial and commercial HVAC businesses contributed well.
Refrigeration revenues of $943 million (18.5% of net sales) were down 14% from the year-ago quarter’s level. The slowdown in container sales and orders was a major concern. Softness in commercial refrigeration was a concern.
Nevertheless, strong growth in European truck/trailer sales was a positive.
Fire & Security revenues (18.8% of net sales) of $960 million were down 33% year over year.
Nevertheless, growing momentum among access solutions and strength in the commercial fire business in the Americas remained positives.
Operating Results
Research & development (R&D) expenses increased 11.2% year over year to $149 million. Selling, general & administrative (SG&A) expenses fell 17.5% from the year-ago quarter’s level to $673 million.
As a percentage of revenues, R&D expenses expanded 30 basis points (bps) from the prior-year quarter’s level, but SG&A expenses contracted 270 bps year over year.
Adjusted operating margin contracted 10 bps on a year-over-year basis to 10.1%.
Adjusted operating margin of the HVAC segment expanded 60 bps year over year to 9.6%. The Refrigeration segment reported an adjusted operating margin of 12.1%, expanding 60 bps. Adjusted operating margin of Fire & Security was 14.5%, expanding by 60 bps year over year.
Balance Sheet
As of Dec 31, 2022, Carrier had cash and cash equivalents of $3.52 billion compared with $2.98 billion on Sep 30, 2022.
Total debt (including the current portion) at the end of the reported quarter was $8.8 billion compared with $8.9 billion at the end of the previous quarter.
In the reported quarter, Carrier generated $1.1 million in cash from operations, up from $790 million in the prior quarter.
Capital expenditure was $140 million in the fourth quarter of 2022. Free cash flow was $983 million for the reported quarter.
2023 Guidance
For 2023, Carrier expects sales of $22 billion.
Carrier anticipates adjusted earnings per share within the range of $2.50-$2.60.
Carrier expects an adjusted operating margin of 14%. CARR expects free cash flow of $1.9 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -11.47% due to these changes.
VGM Scores
Currently, Carrier Global has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Carrier Global has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Carrier Global (CARR) Up 5.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Carrier Global (CARR - Free Report) . Shares have added about 5.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Carrier Global due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Carrier Q4 Earnings Match Estimates
Carrier Global reported fourth-quarter 2022 adjusted earnings of 40 cents per share, which came in line with the Zacks Consensus Estimate. The figure decreased by 9.1% year over year.
Net sales of $5.1 billion surpassed the Zacks Consensus Estimate of $5.08 billion. However, the figure decreased by 1% year over year.
Softness in the Refrigeration and Fire & Security segments led to a year-over-year decline in the top line.
Nevertheless, the company witnessed strong momentum across the HVAC segment.
Product sales (88.7% of net sales) of $4.53 billion increased 6.4% year over year. Service sales (11.3% of net sales) of $578 million were down 34.1% year over year.
Segment Details
HVAC revenues (65% of net sales) increased 21% year over year to $3.32 billion. Residential sector strength in North America drove growth. Also, well-performing light commercial and commercial HVAC businesses contributed well.
Refrigeration revenues of $943 million (18.5% of net sales) were down 14% from the year-ago quarter’s level. The slowdown in container sales and orders was a major concern. Softness in commercial refrigeration was a concern.
Nevertheless, strong growth in European truck/trailer sales was a positive.
Fire & Security revenues (18.8% of net sales) of $960 million were down 33% year over year.
Nevertheless, growing momentum among access solutions and strength in the commercial fire business in the Americas remained positives.
Operating Results
Research & development (R&D) expenses increased 11.2% year over year to $149 million. Selling, general & administrative (SG&A) expenses fell 17.5% from the year-ago quarter’s level to $673 million.
As a percentage of revenues, R&D expenses expanded 30 basis points (bps) from the prior-year quarter’s level, but SG&A expenses contracted 270 bps year over year.
Adjusted operating margin contracted 10 bps on a year-over-year basis to 10.1%.
Adjusted operating margin of the HVAC segment expanded 60 bps year over year to 9.6%. The Refrigeration segment reported an adjusted operating margin of 12.1%, expanding 60 bps. Adjusted operating margin of Fire & Security was 14.5%, expanding by 60 bps year over year.
Balance Sheet
As of Dec 31, 2022, Carrier had cash and cash equivalents of $3.52 billion compared with $2.98 billion on Sep 30, 2022.
Total debt (including the current portion) at the end of the reported quarter was $8.8 billion compared with $8.9 billion at the end of the previous quarter.
In the reported quarter, Carrier generated $1.1 million in cash from operations, up from $790 million in the prior quarter.
Capital expenditure was $140 million in the fourth quarter of 2022. Free cash flow was $983 million for the reported quarter.
2023 Guidance
For 2023, Carrier expects sales of $22 billion.
Carrier anticipates adjusted earnings per share within the range of $2.50-$2.60.
Carrier expects an adjusted operating margin of 14%. CARR expects free cash flow of $1.9 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -11.47% due to these changes.
VGM Scores
Currently, Carrier Global has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Carrier Global has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.