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Otis Worldwide (OTIS) Down 4.2% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Otis Worldwide (OTIS - Free Report) . Shares have lost about 4.2% 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? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
Otis Worldwide Q3 Earnings & Net Sales Beat Estimates
Otis reported impressive results in the third quarter of 2025, wherein adjusted earnings and net sales surpassed the Zacks Consensus Estimate. On a year-over-year basis, the top and bottom lines increased.
The quarterly results were supported by year-over-year growth in contributions from the Service segment, partially offset by a soft sales trend in the New Equipment 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 performance underscores the continued success of its Service-focused strategy. A strong modernization pipeline and improving trends in the New Equipment segment reinforced overall momentum, prompting the company to raise the midpoint of its EPS guidance.
Inside OTIS’ Q3 Headlines
The company reported adjusted earnings of $1.05 per share, which beat the Zacks Consensus Estimate of $1 by 5%. The reported figure increased 9.4% from the year-ago quarter’s EPS of 96 cents.
Net sales of $3.69 billion topped the consensus mark of $3.65 billion by 1.2% and increased 4% on a year-over-year basis. Organically, net sales were up 2% year over year. Favorable foreign exchange movement supported sales growth by 2%.
Adjusted operating margin expanded 20 basis points year over year to 17.1%. The result indicates reduced contributions from the New Equipment segment, mostly offset by growth in the Service segment. Our model predicted the adjusted operating margin to remain flat year over year.
Segment Details of OTIS
Service: The net sales of this segment increased 9% year over year to $2.43 billion. A 6% rise in organic sales was accompanied by a 6% favorable foreign exchange movement. Organic maintenance and repair sales increased 4% and organic modernization sales rose 14% from the year-ago quarter. Our model estimated organic sales for the segment to grow 5.9%. Modernization backlog at constant currency increased 22% year over year.
Segment operating margin expanded 70 bps year over year to 25.5%, 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 $1.26 billion fell 4% from the prior-year period. Organic sales declined 5%. Our model predicted organic sales for the New Equipment segment to decline 6.4%.
New Equipment orders were up 4% at constant currency, driven by high-teens growth in EMEA and mid-single-digit growth in the Americas. These gains were partially offset by a mid-single-digit decline in China and a slight decline in Asia Pacific. The segment’s backlog decreased 2% at actual currency and 1% at constant currency. Excluding China, backlog increased 7% at actual currency and 8% at constant currency.
Segment operating margin contracted 170 bps year over year to 4.7%. The downtrend was due to impacts of lower volume, unfavorable price, tariff headwinds 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 $840 million as of Sept. 30, 2025, down from $2.3 billion reported at 2024-end. Long-term debt increased to $7.59 billion as of the third-quarter end from $6.97 billion at 2024-end.
Net cash flows provided by operating activities were $779 million as of the first nine months of 2025, down from $873 million a year ago.
Adjusted free cash flow (“FCF”) totaled $766 million at the end of the first nine months, down from $889 million a year ago.
OTIS Revises 2025 Guidance
The company still expects net sales to be between $14.5 billion and $14.6 billion. The projection indicates approximately 2% year-over-year growth. Organic sales growth is projected to be approximately 1%.
Organic New Equipment sales are expected to be down about 7%. Organic Service sales are expected to be up nearly 5%.
Adjusted operating profit is still expected to be between $2.4 billion and $2.5 billion, now reflecting an increase of $65-$85 million at constant currency, excluding a tariff impact of approximately ($30) million and an increase of $75-$95 million at actual currency, including tariff impacts.
Adjusted EPS is now anticipated to be between $4.04 and $4.08 compared with the previously expected range of $4.00-$4.10.The projection indicates 5-7% year-over-year growth.
Adjusted FCF is now expected to be approximately $1.45 billion compared with the previously expected range of $1.4 billion and $1.5 billion. OTIS expects the adjusted effective tax rate to be approximately 24.8%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Otis Worldwide has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. 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.
Performance of an Industry Player
Otis Worldwide is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Applied Industrial Technologies (AIT - Free Report) , a stock from the same industry, has gained 0.6%. The company reported its results for the quarter ended September 2025 more than a month ago.
Applied Industrial Technologies reported revenues of $1.2 billion in the last reported quarter, representing a year-over-year change of +9.2%. EPS of $2.63 for the same period compares with $2.36 a year ago.
Applied Industrial Technologies is expected to post earnings of $2.49 per share for the current quarter, representing a year-over-year change of +4.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.
Applied Industrial Technologies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Otis Worldwide (OTIS) Down 4.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Otis Worldwide (OTIS - Free Report) . Shares have lost about 4.2% 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? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
Otis Worldwide Q3 Earnings & Net Sales Beat Estimates
Otis reported impressive results in the third quarter of 2025, wherein adjusted earnings and net sales surpassed the Zacks Consensus Estimate. On a year-over-year basis, the top and bottom lines increased.
The quarterly results were supported by year-over-year growth in contributions from the Service segment, partially offset by a soft sales trend in the New Equipment 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 performance underscores the continued success of its Service-focused strategy. A strong modernization pipeline and improving trends in the New Equipment segment reinforced overall momentum, prompting the company to raise the midpoint of its EPS guidance.
Inside OTIS’ Q3 Headlines
The company reported adjusted earnings of $1.05 per share, which beat the Zacks Consensus Estimate of $1 by 5%. The reported figure increased 9.4% from the year-ago quarter’s EPS of 96 cents.
Net sales of $3.69 billion topped the consensus mark of $3.65 billion by 1.2% and increased 4% on a year-over-year basis. Organically, net sales were up 2% year over year. Favorable foreign exchange movement supported sales growth by 2%.
Adjusted operating margin expanded 20 basis points year over year to 17.1%. The result indicates reduced contributions from the New Equipment segment, mostly offset by growth in the Service segment. Our model predicted the adjusted operating margin to remain flat year over year.
Segment Details of OTIS
Service: The net sales of this segment increased 9% year over year to $2.43 billion. A 6% rise in organic sales was accompanied by a 6% favorable foreign exchange movement. Organic maintenance and repair sales increased 4% and organic modernization sales rose 14% from the year-ago quarter. Our model estimated organic sales for the segment to grow 5.9%. Modernization backlog at constant currency increased 22% year over year.
Segment operating margin expanded 70 bps year over year to 25.5%, 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 $1.26 billion fell 4% from the prior-year period. Organic sales declined 5%. Our model predicted organic sales for the New Equipment segment to decline 6.4%.
New Equipment orders were up 4% at constant currency, driven by high-teens growth in EMEA and mid-single-digit growth in the Americas. These gains were partially offset by a mid-single-digit decline in China and a slight decline in Asia Pacific. The segment’s backlog decreased 2% at actual currency and 1% at constant currency. Excluding China, backlog increased 7% at actual currency and 8% at constant currency.
Segment operating margin contracted 170 bps year over year to 4.7%. The downtrend was due to impacts of lower volume, unfavorable price, tariff headwinds 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 $840 million as of Sept. 30, 2025, down from $2.3 billion reported at 2024-end. Long-term debt increased to $7.59 billion as of the third-quarter end from $6.97 billion at 2024-end.
Net cash flows provided by operating activities were $779 million as of the first nine months of 2025, down from $873 million a year ago.
Adjusted free cash flow (“FCF”) totaled $766 million at the end of the first nine months, down from $889 million a year ago.
OTIS Revises 2025 Guidance
The company still expects net sales to be between $14.5 billion and $14.6 billion. The projection indicates approximately 2% year-over-year growth. Organic sales growth is projected to be approximately 1%.
Organic New Equipment sales are expected to be down about 7%. Organic Service sales are expected to be up nearly 5%.
Adjusted operating profit is still expected to be between $2.4 billion and $2.5 billion, now reflecting an increase of $65-$85 million at constant currency, excluding a tariff impact of approximately ($30) million and an increase of $75-$95 million at actual currency, including tariff impacts.
Adjusted EPS is now anticipated to be between $4.04 and $4.08 compared with the previously expected range of $4.00-$4.10.The projection indicates 5-7% year-over-year growth.
Adjusted FCF is now expected to be approximately $1.45 billion compared with the previously expected range of $1.4 billion and $1.5 billion. OTIS expects the adjusted effective tax rate to be approximately 24.8%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Otis Worldwide has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. 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.
Performance of an Industry Player
Otis Worldwide is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Applied Industrial Technologies (AIT - Free Report) , a stock from the same industry, has gained 0.6%. The company reported its results for the quarter ended September 2025 more than a month ago.
Applied Industrial Technologies reported revenues of $1.2 billion in the last reported quarter, representing a year-over-year change of +9.2%. EPS of $2.63 for the same period compares with $2.36 a year ago.
Applied Industrial Technologies is expected to post earnings of $2.49 per share for the current quarter, representing a year-over-year change of +4.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.
Applied Industrial Technologies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.