Otis Worldwide Corporation (OTIS Quick QuoteOTIS - Free Report) is scheduled to report third-quarter 2026 results on Oct. 28, before the opening bell.

In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 1%, and net sales topped it by 3.7%. On a year-over-year basis, the bottom line declined 3.8%, while the top line grew 7.3%.

OTIS’ earnings surpassed the consensus mark in two of the trailing four quarters, missed on one occasion and met on the remaining occasion, with an average surprise of 1%.

How Are Estimates Placed for OTIS Stock?

For the third quarter, the Zacks Consensus Estimate for earnings per share (EPS) has trended downward to $1 from 99 cents in the past 30 days. The estimated figure indicates a 4.8% decline from the year-ago adjusted EPS of $1.05.

The consensus mark for net sales is pegged at $3.85 billion, indicating 4.3% growth from the year-ago figure of $3.7 billion.

Key Factors to Note for OTIS’ Q3 Earnings

Sales

Otis Worldwide’s third-quarter performance is likely to have benefited from continued momentum in its Service segment, which accounted for 66.9% of second-quarter 2026 net sales. Strong repair and modernization demand, along with improving maintenance trends, is expected to have kept the segment a primary growth driver. Management projects mid-single-digit growth in Service organic sales for the third quarter, supported by repair and modernization activity, although modernization growth is expected to have moderated sequentially. The company’s focus on service quality, pricing initiatives and backlog execution is also likely to have supported revenue growth in the to-be-reported quarter.

Maintenance and repair initiatives are also likely to have supported performance. Otis Worldwide continues to implement value-driven micro-pricing strategies and proactive repair offerings to strengthen customer engagement and improve pricing realization. The company previously outlined approximately $35 million in incremental repair pricing benefits for 2026. These initiatives, alongside higher repair volumes, are expected to have supported third-quarter Service performance.

The company’s Service Excellence and digital initiatives are likely to have aided operational execution. Otis Worldwide has been investing in service quality, field productivity and customer retention, supported by AI-assisted tools and standardized operating processes. Continued implementation of these initiatives, along with its broader Service Operating Model, is likely to have strengthened customer service and execution capabilities in the quarter under review.

However, weakness in the New Equipment segment, which accounted for 33.1% of second-quarter 2026 net sales, is likely to have partly constrained third-quarter top-line growth. Although management expects sales trends to improve sequentially, subdued construction activity and pricing pressure in China, alongside demand challenges in the Middle East and Southern Europe, are likely to have weighed on the segment’s performance.

For the third quarter, our Zacks model predicts the Service segment’s net sales to increase year over year by 5.3% to $2.56 billion, with the New Equipment segment’s net sales declining 1.2% to $1.24 billion.

Margins

On the margin front, higher labor and material costs, productivity challenges and ongoing Service investments are expected to have remained headwinds. Longer onboarding periods for skilled mechanics and higher labor rates associated with accelerating repair and modernization execution are likely to have continued affecting profitability in the to-be-reported quarter. We expect the adjusted operating margin in the Service and New Equipment segments to contract 60 basis points (bps) and 160 bps year over year to 24% and 3.1%, respectively.

Moreover, delayed improvements in maintenance customer retention and a measured approach to incremental micro-pricing are expected to have limited margin recovery. Management previously identified approximately $20 million in retention and maintenance pricing-related headwinds and an additional $50 million in productivity and field-cost pressures relative to its earlier full-year outlook. For the to-be-reported quarter, our model expects SG&A expenses to increase year over year by 2.8% to $518.3 million. Although higher repair pricing, modernization volumes and cost-reduction initiatives are expected to have provided some support, these benefits may have been partly offset by continued operating cost pressures.

What Our Model Unveils for OTIS

Our proven model does not predict an earnings beat for Otis Worldwide this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, it is not the case here.

OTIS’ Earnings ESP: The company has an Earnings ESP of -0.57%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

OTIS’ Zacks Rank: Currently, the stock carries a Zacks Rank #3.

Stocks With the Favorable Combination

Here are some companies from the Industrial Products sector, which, according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Eaton Corporation plc (ETN Quick QuoteETN - Free Report) has an Earnings ESP of +0.45% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Eaton’s earnings topped the consensus mark in three of the last four quarters and met on the remaining occasion, with the average surprise being 1.3%. Earnings for ETN’s third quarter of 2026 are expected to grow 15% year over year.

Kennametal Inc. (KMT Quick QuoteKMT - Free Report) currently has an Earnings ESP of +1.50% and a Zacks Rank of 3.
 
Kennametal’s earnings topped the consensus mark in each of the last four quarters, with the average surprise being 29.3%. Earnings for KMT’s third quarter of 2026 are expected to surge a whopping 682.4% year over year.

Watsco, Inc. (WSO Quick QuoteWSO - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank of 3 at present.
 
Watsco’s earnings topped the consensus mark in one of the last four quarters and missed on the remaining three occasions, with the average negative surprise being 4.9%. Earnings for WSO’s third quarter of 2026 are expected to improve 3.8% year over year.