Otis Worldwide Corporation (OTIS Quick QuoteOTIS - Free Report) is scheduled to report fourth-quarter 2024 results on Jan. 29, before the opening bell.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

In the last reported quarter, the company’s adjusted earnings and net sales missed the Zacks Consensus Estimate by 1% and 1.3%, respectively. On a year-over-year basis, the metrics increased 1.1% and 0.7%, respectively.

OTIS’ earnings surpassed the consensus mark in three of the trailing four quarters and missed on the remaining occasion, with an average surprise of 1.4%.

Trend in Otis Worldwide’s Estimate Revision

For the fourth quarter, the Zacks Consensus Estimate for adjusted earnings per share (EPS) has moved south to 95 cents from 96 cents in the past 30 days. However, the estimated figure indicates a rise of 9.2% from the year-ago adjusted EPS of 87 cents.

The consensus mark for net sales is pegged at $3.65 billion, indicating a 0.8% increase from the year-ago figure of $3.62 billion.

Key Factors to Note for OTIS’ Q4 Earnings

Revenues

This leading elevator and escalator manufacturing, installation and service company’s top-line performance is likely to have improved year over year thanks to increased contributions from its Service segment. The service segment is expected to have been driven by solid modernization (MOD) order growth globally. OTIS’ continuous focus on product innovations and the integration of new technologies, driven by ongoing research and development efforts, is likely to have added to growing demand trends.

However, dismal trends across the New Equipment segment are likely to have somewhat offset the growing trend of the top line in the quarter. This segment is likely to have been hurting from challenges faced in China and somewhat in the EMEA region, regarding sales growth. Nonetheless, OTIS expects that the bounce back in the Americas' new equipment orders, along with continued strength in Japan and Southeast Asia, is likely to have aided this segment to some extent.

For the fourth quarter, our model indicates revenues within the Service segment to rise year over year by 6.6% to $2.30 billion. On the other hand, we expect New Equipment revenues to decline 6.5% year over year to $1.37 billion.

Margins

Meanwhile, lower volume and unfavorable mix in the New Equipment segment, accompanied by wage inflation across the Service segment, are expected to have been headwinds to OTIS’ bottom line. However, favorable pricing, productivity and commodity tailwinds, along with leverage from the increased top line because of improved contributions from the Service segment, are likely to have eliminated the negative impacts of the headwinds during the quarter.

Moreover, lower restructuring costs and favorable foreign exchange impacts are expected to have resulted in a decline in the selling, general and administrative (SG&A) expenses in the fourth quarter. We expect OTIS’ SG&A expenses to decline 7.1% year over year to $462.8 million.

Our model expects the adjusted operating margin in the New Equipment segment to remain flat year over year at 6.1% while the same for the Service segment is anticipated to increase 40 basis points to 24.4%.

What the Zacks Model Unveils for OTIS

Our proven model does not conclusively predict an earnings beat for Otis Worldwide this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as elaborated below.

Earnings ESP: OTIS has an Earnings ESP of -1.40% at present. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, the company carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With the Favorable Combination

Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to beat on earnings in their respective quarters to be reported.

Louisiana-Pacific Corporation (LPX Quick QuoteLPX - Free Report) has an Earnings ESP of +11.79% and a Zacks Rank of 2.

LPX reported better-than-expected earnings in each of the last four quarters, the average surprise being 30.7%. The company’s earnings for the fourth quarter of 2024 are expected to increase 4.2%.

Sterling Infrastructure, Inc. (STRL Quick QuoteSTRL - Free Report) currently has an Earnings ESP of +2.99% and a Zacks Rank of 3.

STRL’s earnings for the fourth quarter of 2024 are expected to increase 3.1%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 21.5%.

PulteGroup, Inc. (PHM Quick QuotePHM - Free Report) currently has an Earnings ESP of +2.36% and a Zacks Rank of 3.

PHM’s earnings for the fourth quarter of 2024 are expected to decrease 2.1%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 10.9%.