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Otis Worldwide (OTIS) Down 1.8% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Otis Worldwide (OTIS - Free Report) . Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Otis Worldwide due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Otis Worldwide Corporation before we dive into how investors and analysts have reacted as of late.
Otis reported mixed results in the second quarter of 2025, wherein adjusted earnings surpassed the Zacks Consensus Estimate while net sales missed the same. On a year-over-year basis, the top line and the bottom line tumbled.
The quarterly results were impacted by a soft sales trend in the New Equipment segment, partially offset by year-over-year growth in contributions from the Service segment. The Service segment grew, driven by increased trends in organic maintenance and repair sales and organic modernization sales, supporting the overall performance.
The company’s continued focus on modernization is backing its order and backlog growth. Moving forward, OTIS believes that the efficient execution of its Service segment-driven strategy and robust repair business will position it well for 2025 and beyond. With the improved performance and commitment to creating value for its shareholders, the company reiterated its 2025 earnings per share (EPS) view.
Inside OTIS’ Q2 Headlines
The company reported adjusted earnings of $1.05 per share, which topped the Zacks Consensus Estimate of $1.02 by 2.9%. However, the reported figure inched down 1% from the year-ago quarter’s EPS of $1.06.
Net sales of $3.6 billion missed the consensus mark of $3.69 billion by 2.4% and marginally declined 0.2% on a year-over-year basis. Organically, net sales were down 2% year over year. Currency headwinds impacted sales by 1%.
Adjusted operating margin remained flat year over year at 17%. The result indicates reduced contributions from the New Equipment segment, mostly offset by growth in the Service segment.
Segment Details of OTIS
Service: The net sales of this segment increased 6% year over year to $2.32 billion. A 4% rise in organic sales was partially offset by a 2% negative impact from foreign exchange. Organic maintenance and repair sales increased 4% and organic modernization sales rose 5% from the year-ago quarter. Modernization backlog at constant currency increased 16% year over year.
Segment operating margin expanded 20 bps year over year to 24.9%, due to higher volume, favorable pricing and productivity, partially offset by inflationary pressures, including higher labor costs and mix.
New Equipment: This segment’s net sales of $1.28 billion fell 10% from the prior-year period. Organic sales declined 11%. New Equipment orders were down 1% at constant currency. The growth of more than 20% in Asia Pacific and low-teens improvement in the Americas were offset by more than a 20% decline in China and a low-single-digit decline in EMEA. The segment’s backlog decreased 1% at actual currency and 3% at constant currency. Excluding China, the segment’s backlog grew 10% at actual currency and 8% at constant currency.
Segment operating margin contracted 240 bps year over year to 5.3%. The downtrend was due to impacts of lower volume, unfavorable price and mix, which was partially offset by productivity tailwinds and other restructuring actions.
Financial Position of OTIS
Otis Worldwide had cash and cash equivalents of $688 million as of June 30, 2025, down from $2.3 billion reported at 2024-end. Long-term debt increased to $7.07 billion as of the second-quarter end from $6.97 billion at 2024-end.
Net cash flows provided by operating activities were $405 million as of the first six months of 2025, down from $479 million a year ago.
Adjusted free cash flow (FCF) totaled $429 million at the end of the first six months, down from $508 million a year ago.
OTIS Revises 2025 Guidance
The company now expects net sales to be between $14.5 billion and $14.6 billion, down from the prior expectation of $14.6-$14.8 billion. The new projection indicates approximately 1-2% year-over-year growth. Organic sales growth is now projected to be approximately 1%, down from the prior expected range of 2- 4%. Organic New Equipment sales are now expected to be down about 7%, wider than the previous expectation between 1% and 4%. Organic Service sales are now expected to be up nearly 5% compared with the previously expected range of 5-7%.
Adjusted operating profit is still expected to be between $2.4 billion and $2.5 billion, reflecting an increase of $50-$90 million at constant currency, excluding a tariff impact of ($35) million to ($25) million and an increase of $55-$105 million at actual currency, including tariff impacts. Adjusted EPS is still anticipated to be between $4.00 and $4.10, indicating 4-7% year-over-year growth.
Adjusted FCF is now expected to be between $1.4 billion and $1.5 billion, down from the prior expectation of approximately $1.6 billion. OTIS expects the adjusted effective tax rate to be approximately 24.8%.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -6.92% due to these changes.
VGM Scores
At this time, Otis Worldwide has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock has a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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, Otis Worldwide has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Otis Worldwide (OTIS) Down 1.8% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Otis Worldwide (OTIS - Free Report) . Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Otis Worldwide due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Otis Worldwide Corporation before we dive into how investors and analysts have reacted as of late.
Otis Worldwide Q2 Earnings Top, Sales Miss, 2025 Sales View Down
Otis reported mixed results in the second quarter of 2025, wherein adjusted earnings surpassed the Zacks Consensus Estimate while net sales missed the same. On a year-over-year basis, the top line and the bottom line tumbled.
The quarterly results were impacted by a soft sales trend in the New Equipment segment, partially offset by year-over-year growth in contributions from the Service segment. The Service segment grew, driven by increased trends in organic maintenance and repair sales and organic modernization sales, supporting the overall performance.
The company’s continued focus on modernization is backing its order and backlog growth. Moving forward, OTIS believes that the efficient execution of its Service segment-driven strategy and robust repair business will position it well for 2025 and beyond. With the improved performance and commitment to creating value for its shareholders, the company reiterated its 2025 earnings per share (EPS) view.
Inside OTIS’ Q2 Headlines
The company reported adjusted earnings of $1.05 per share, which topped the Zacks Consensus Estimate of $1.02 by 2.9%. However, the reported figure inched down 1% from the year-ago quarter’s EPS of $1.06.
Net sales of $3.6 billion missed the consensus mark of $3.69 billion by 2.4% and marginally declined 0.2% on a year-over-year basis. Organically, net sales were down 2% year over year. Currency headwinds impacted sales by 1%.
Adjusted operating margin remained flat year over year at 17%. The result indicates reduced contributions from the New Equipment segment, mostly offset by growth in the Service segment.
Segment Details of OTIS
Service: The net sales of this segment increased 6% year over year to $2.32 billion. A 4% rise in organic sales was partially offset by a 2% negative impact from foreign exchange. Organic maintenance and repair sales increased 4% and organic modernization sales rose 5% from the year-ago quarter. Modernization backlog at constant currency increased 16% year over year.
Segment operating margin expanded 20 bps year over year to 24.9%, due to higher volume, favorable pricing and productivity, partially offset by inflationary pressures, including higher labor costs and mix.
New Equipment: This segment’s net sales of $1.28 billion fell 10% from the prior-year period. Organic sales declined 11%. New Equipment orders were down 1% at constant currency. The growth of more than 20% in Asia Pacific and low-teens improvement in the Americas were offset by more than a 20% decline in China and a low-single-digit decline in EMEA. The segment’s backlog decreased 1% at actual currency and 3% at constant currency. Excluding China, the segment’s backlog grew 10% at actual currency and 8% at constant currency.
Segment operating margin contracted 240 bps year over year to 5.3%. The downtrend was due to impacts of lower volume, unfavorable price and mix, which was partially offset by productivity tailwinds and other restructuring actions.
Financial Position of OTIS
Otis Worldwide had cash and cash equivalents of $688 million as of June 30, 2025, down from $2.3 billion reported at 2024-end. Long-term debt increased to $7.07 billion as of the second-quarter end from $6.97 billion at 2024-end.
Net cash flows provided by operating activities were $405 million as of the first six months of 2025, down from $479 million a year ago.
Adjusted free cash flow (FCF) totaled $429 million at the end of the first six months, down from $508 million a year ago.
OTIS Revises 2025 Guidance
The company now expects net sales to be between $14.5 billion and $14.6 billion, down from the prior expectation of $14.6-$14.8 billion. The new projection indicates approximately 1-2% year-over-year growth. Organic sales growth is now projected to be approximately 1%, down from the prior expected range of 2- 4%. Organic New Equipment sales are now expected to be down about 7%, wider than the previous expectation between 1% and 4%. Organic Service sales are now expected to be up nearly 5% compared with the previously expected range of 5-7%.
Adjusted operating profit is still expected to be between $2.4 billion and $2.5 billion, reflecting an increase of $50-$90 million at constant currency, excluding a tariff impact of ($35) million to ($25) million and an increase of $55-$105 million at actual currency, including tariff impacts. Adjusted EPS is still anticipated to be between $4.00 and $4.10, indicating 4-7% year-over-year growth.
Adjusted FCF is now expected to be between $1.4 billion and $1.5 billion, down from the prior expectation of approximately $1.6 billion. OTIS expects the adjusted effective tax rate to be approximately 24.8%.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -6.92% due to these changes.
VGM Scores
At this time, Otis Worldwide has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock has a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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, Otis Worldwide has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.