It has been about a month since the last earnings report for United Technologies . Shares have added about 4.8% 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 the most recent earnings report in order to get a better handle on the important catalysts.
United Technologies Q3 Earnings & Revenues Top, Up Y/Y
United Technologies reported better-than-expected third-quarter 2019 results. Quarterly adjusted earnings came in at $2.21 per share, surpassing the Zacks Consensus Estimate of $2.03. The bottom line was also higher than the year-ago figure of $1.93.
Revenues came in at $19,496 million, up 18.1% year over year. The top line also outpaced the consensus estimate of $19,313 million. The rise was driven by 5% contribution from organic sales growth and 14% positive impact of acquisitions, partially offset by 1% negative impact of currency translation.
Otis’ revenues for the reported quarter were $3,307 million, up 2.6% year over year. Aggregate sales for Carrier totaled $4,822 million, down 1.2%. Pratt & Whitney’s third-quarter revenues were $5,283 million, up 10.3% while the same for Collins Aerospace Systems surged 64.2% to $6,495 million.
Costs and Margins
Cost of products and services sold during the third quarter was $14,211 million, up 13.4% year over year.
Selling, general and administrative expenses jumped 25.2% to $2,104 million.
Adjusted operating profit margin was 15.3%, up 120 basis points.
Balance Sheet/Cash Flow
Exiting the third quarter, United Technologies had cash and cash equivalents of $7,341 million, up from $6,152 million on Dec 31, 2018. Long-term debt was $37,782 million, down from $41,192 million recorded at the end of 2018.
During the July-September quarter, the company generated $2,490 million cash from operating activities compared with $1,762 million reported a year ago. Its capital expenditures were up 28.1% to $529 million.
United Technologies has revised 2019 earnings guidance to $8.05-$8.15 per share from $7.90-$8.05 projected earlier. For 2019, it currently expects its revenues to be in the range of $76-$76.5 billion compared with the $75.5-$77 billion range guided earlier. It continues to expect 4-5% organic sales growth for 2019.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
At this time, United Technologies has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 A. 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.