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Here's Why Investors Must Hold Otis Worldwide (OTIS) Stock Now
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Otis Worldwide Corporation (OTIS - Free Report) is benefiting from strategic investments in research and development, and digital initiatives, which are fostering its innovation capabilities. Higher backlog levels, across its New Equipment segment and Modernization (under the Service segment) unit also indicate solid top-line prospects for the company.
The Zacks Consensus Estimate for this currently Zacks Rank #3 (Hold) company's 2024 earnings has risen to $3.87 per share from $3.82 in the past 30 days, indicating growth of 9.3% from the year-ago reported figure. First-quarter 2024 earnings are expected to increase 8.8% year over year.
OTIS also delivered a trailing four-quarter earnings surprise of 6.7%, on average. The growth prospect is further solidified with a VGM Score of B, backed by a Growth Score of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and the prospects of an outperformance in the near term.
However, the aforementioned tailwinds are partially offset by headwinds in the form of high costs and expenses along with the high concentration of the company’s business in the international market.
Image Source: Zacks Investment Research
Shares of this leading elevator and escalator manufacturing, installation and service company have increased 11.4% in the past three months compared with the Zacks Building Products - Miscellaneous industry’s 15.7% growth.
Factors That Make the Stock Attractive
Strategic Investments: One of the primary strategies of Otis includes tactical investments in innovations and other initiatives that foster its growth prospects. The company maintained its research and development investment in 2023 as well, investing $144 million and 1% of net sales. Furthermore, in the same year, it also invested about $57 million in digital and strategic initiatives.
At 2023 end, it had 11 R&D centers and 17 factories across the world, primarily in China, India, Japan, France, Germany, Spain and the United States. These centers are strategically placed to enable the efficient development of engineering solutions. Also, it has approximately 1,200 engineers globally, with an intense focus on digital initiatives, software, design and user interface, and experience.
Growing Backlog Levels: Otis is witnessing growth prospects through an increase in orders across both its reporting segments, New Equipment and Service. This uptrend is backed by its innovation capabilities and the strategic execution of its long-term strategy to create value for its customers.
As of Dec 31, 2023, orders under the New Equipment segment and Modernization services (under the Service segment) increased year over year by 2.9% and 11%, respectively. The uptick in the orders attributed to the growth backlog levels, which increased year over year for the New Equipment segment and Modernization services by 2% and 15%, respectively. The company is optimistic about the growth trend as it expects the positive momentum to be carried into 2024.
Factors Ailing Growth Prospects
High Costs & Expenses: Otis is facing headwinds in the form of high costs and expenses given its line of business. Elevators, escalators and related equipment need extensive research and development and hence involve costs. Furthermore, the company is highly committed to joint ventures, owing to which it experiences higher costs, which put pressure on margins.
In 2023, the total costs and expenses of the company were $12.04 billion, up 3.1% year over year on the back of inflationary pressures, including increases in annual wage and other employment-related costs, higher freight and fuel costs, along with higher restructuring costs and credit loss reserves.
High Concentration in International Markets: Otis is subject to various risks including changes in local and regional economic conditions, as well as risks associated with changes in local government laws, regulations and policies, given its maximum operations are concentrated outside the United States. About 72% of the company’s net sales were derived from international operations in 2023.
Currently, China is the largest end market for sales of Otis’ New Equipment business. China accounted for one-third of its global New Equipment net sales and more than half of global New Equipment unit volume in 2023. The growth in 2023 organic sales was partially offset by a sales decline in China. Also, 2023 New Equipment orders were hurt by mid-single-digit declines in China.
Zacks Rank
Here are some better-ranked stocks from the Construction sector.
NVR delivered a trailing four-quarter earnings surprise of 8.1%, on average. The stock has gained 33.5% in the past six months. The Zacks Consensus Estimate for NVR’s 2024 sales and earnings per share (EPS) indicates growth of 7.7% and 4.6%, respectively, from the prior-year levels.
Vulcan Materials Company (VMC - Free Report) currently sports a Zacks Rank of 1. VMC delivered a trailing four-quarter earnings surprise of 19.5%, on average. The stock has gained 35.5% in the past six months.
The Zacks Consensus Estimate for VMC’s 2024 sales and EPS indicates an improvement of 1.4% and 19.4%, respectively, from a year ago.
Sterling Infrastructure, Inc. (STRL - Free Report) presently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 20.4%, on average. Shares of STRL have increased 53.1% in the past six months.
The Zacks Consensus Estimate for STRL’s 2024 sales and EPS indicates a rise of 11.7% and 11.4%, respectively, from the prior-year levels.
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Here's Why Investors Must Hold Otis Worldwide (OTIS) Stock Now
Otis Worldwide Corporation (OTIS - Free Report) is benefiting from strategic investments in research and development, and digital initiatives, which are fostering its innovation capabilities. Higher backlog levels, across its New Equipment segment and Modernization (under the Service segment) unit also indicate solid top-line prospects for the company.
The Zacks Consensus Estimate for this currently Zacks Rank #3 (Hold) company's 2024 earnings has risen to $3.87 per share from $3.82 in the past 30 days, indicating growth of 9.3% from the year-ago reported figure. First-quarter 2024 earnings are expected to increase 8.8% year over year.
OTIS also delivered a trailing four-quarter earnings surprise of 6.7%, on average. The growth prospect is further solidified with a VGM Score of B, backed by a Growth Score of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and the prospects of an outperformance in the near term.
However, the aforementioned tailwinds are partially offset by headwinds in the form of high costs and expenses along with the high concentration of the company’s business in the international market.
Image Source: Zacks Investment Research
Shares of this leading elevator and escalator manufacturing, installation and service company have increased 11.4% in the past three months compared with the Zacks Building Products - Miscellaneous industry’s 15.7% growth.
Factors That Make the Stock Attractive
Strategic Investments: One of the primary strategies of Otis includes tactical investments in innovations and other initiatives that foster its growth prospects. The company maintained its research and development investment in 2023 as well, investing $144 million and 1% of net sales. Furthermore, in the same year, it also invested about $57 million in digital and strategic initiatives.
At 2023 end, it had 11 R&D centers and 17 factories across the world, primarily in China, India, Japan, France, Germany, Spain and the United States. These centers are strategically placed to enable the efficient development of engineering solutions. Also, it has approximately 1,200 engineers globally, with an intense focus on digital initiatives, software, design and user interface, and experience.
Growing Backlog Levels: Otis is witnessing growth prospects through an increase in orders across both its reporting segments, New Equipment and Service. This uptrend is backed by its innovation capabilities and the strategic execution of its long-term strategy to create value for its customers.
As of Dec 31, 2023, orders under the New Equipment segment and Modernization services (under the Service segment) increased year over year by 2.9% and 11%, respectively. The uptick in the orders attributed to the growth backlog levels, which increased year over year for the New Equipment segment and Modernization services by 2% and 15%, respectively. The company is optimistic about the growth trend as it expects the positive momentum to be carried into 2024.
Factors Ailing Growth Prospects
High Costs & Expenses: Otis is facing headwinds in the form of high costs and expenses given its line of business. Elevators, escalators and related equipment need extensive research and development and hence involve costs. Furthermore, the company is highly committed to joint ventures, owing to which it experiences higher costs, which put pressure on margins.
In 2023, the total costs and expenses of the company were $12.04 billion, up 3.1% year over year on the back of inflationary pressures, including increases in annual wage and other employment-related costs, higher freight and fuel costs, along with higher restructuring costs and credit loss reserves.
High Concentration in International Markets: Otis is subject to various risks including changes in local and regional economic conditions, as well as risks associated with changes in local government laws, regulations and policies, given its maximum operations are concentrated outside the United States. About 72% of the company’s net sales were derived from international operations in 2023.
Currently, China is the largest end market for sales of Otis’ New Equipment business. China accounted for one-third of its global New Equipment net sales and more than half of global New Equipment unit volume in 2023. The growth in 2023 organic sales was partially offset by a sales decline in China. Also, 2023 New Equipment orders were hurt by mid-single-digit declines in China.
Zacks Rank
Here are some better-ranked stocks from the Construction sector.
NVR, Inc. (NVR - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NVR delivered a trailing four-quarter earnings surprise of 8.1%, on average. The stock has gained 33.5% in the past six months. The Zacks Consensus Estimate for NVR’s 2024 sales and earnings per share (EPS) indicates growth of 7.7% and 4.6%, respectively, from the prior-year levels.
Vulcan Materials Company (VMC - Free Report) currently sports a Zacks Rank of 1. VMC delivered a trailing four-quarter earnings surprise of 19.5%, on average. The stock has gained 35.5% in the past six months.
The Zacks Consensus Estimate for VMC’s 2024 sales and EPS indicates an improvement of 1.4% and 19.4%, respectively, from a year ago.
Sterling Infrastructure, Inc. (STRL - Free Report) presently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 20.4%, on average. Shares of STRL have increased 53.1% in the past six months.
The Zacks Consensus Estimate for STRL’s 2024 sales and EPS indicates a rise of 11.7% and 11.4%, respectively, from the prior-year levels.