It has been about a month since the last earnings report for United Technologies (UTX - Free Report) . Shares have added about 3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is United Technologies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
United Technologies Tops Q3 Earnings, Ups 2018 EPS View
United Technologies reported better-than-expected results for third-quarter 2018.
Quarterly adjusted earnings came in at $1.93 per share, surpassing the Zacks Consensus Estimate by 6.6%. The reported figure also came in higher than the year-ago tally of $1.73 per share.
Revenues in the reported quarter came in at $16,510 million, up 9.6% year over year. The top line also outpaced the Zacks Consensus Estimate of $16,140 million. Revenues grew 8% year over year organically, primarily on the back of the newly-made innovation investments.
Otis’ revenues in the reported quarter were $3,223 million, up 2.1% year over year. Aggregate sales of the UTC Climate, Controls & Security segment increased 4.1% year over year to $4,880 million. The Pratt & Whitney segment’s third-quarter revenues came in at $4,789 million, up 23.7% from the year-ago tally. The top-line performance of the UTC Aerospace Systems segment improved 8.7% year over year to $3,955 million.
Costs and Margins
Cost of products and services sold during the Sep-end quarter was $12,536 million, up 12.9% year over year.
Selling, general and administrative expenses in the third quarter flared up 6.3% year over year to $1,681 million.
Adjusted operating margin in the quarter was 14.1%, down 90 basis points from the year-ago figure.
Balance Sheet/Cash Flow
Exiting the third quarter, United Technologies had cash and cash equivalents of $13,799 million, up from $8,985 million recorded as of Dec 21, 2017. Long-term debt stood at $38,275 million, up from $24,989 million recorded at the end of 2017.
During the Jul-Sep quarter, the company generated $1,762 million cash from operating activities, as against $29 million cash used in the year-ago quarter. Capital expended was down 6.8% year over year to $413 million.
United Technologies is poised to boost its revenues and profitability on the back of stronger end-market demand and innovation investments. The company believes the Rockwell Collins buyout deal (inked in September 2017) will strengthen its position as a premium systems supplier in the global aerospace industry. The company has raised its 2018 earnings view to $7.20-$7.30 per share from the prior guidance of $7.10-$7.25 per share. The company also lifted the lower end of its sales view for 2018. Revenue for the full year is currently projected at $64.0-$64.5 billion, as against the previous view of $63.5-$64.5 billion. Notably, the company anticipates securing 6% organic sales growth in 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5.09% due to these changes.
Currently, United Technologies has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, United Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.