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United Technologies (UTX) Partners With Tim Hortons in China

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United Technologies Corporation’s (UTX - Free Report) business unit Carrier recently announced that it has entered into a collaboration with Tim Hortons to support the latter’s store expansion plan in the country. Notably, the deal will involve Carrier to provide integrated HVAC (heating, ventilating and air conditioning) solutions and services for Tim Hortons' current and prospective coffee stores in China.

Per the pact, Carrier will be responsible for offering Tim Hortons (recognized as Tims Coffee House in China) its advanced Variable Refrigerant Flow (VRF) technology along with a custom services package, which will support optimal HVAC operation in Tims coffee houses in China.

Notably, with the help of a 2-pipe system for both heat pump and heat recovery, Carrier’s VRF systems bring in an effective matching solution for building’s cooling and heating requirements. Carrier’s customized equipment and services package will also enable Tims coffee houses to boost equipment performance, apart from offering an all-time support facility. In addition, Carrier’s VRF systems will offer several benefits including energy savings and cost-effective installation among others.

Existing Business Scenario

United Technologies is well poised to gain from strength in commercial aftermarket and military businesses. Also,strong orders for the company’s Geared Turbofan engines and its focus on investment in aerospace products portfolio are likely to be revenue drivers for the company's aerospace business. For 2019, total revenues are anticipated to be within the $76-$76.5 billion range, higher than $66.5 billion generated in 2018.

Also, the company’s buyout of Rockwell Collins (closed in November 2018) is worth mentioning. Notably, the acquisition not only solidified the company's existing product portfolio but also aided in launching innovative solutions for aerospace customers. United Technologies expects about 60 cents of accretion to adjusted earnings per share from this integration in 2019.

However, escalating cost of sales has been a major cause for concern. Notably, in the second and third quarters, the company’s cost of sales was up 16% and 13.4% year over year, respectively, due to higher tariffs. Further, restructuring costs had an adverse impact of 6 cents on both the second and the third quarter’s bottom line.

In the past three months, this Zacks Rank #3 (Hold) company has returned 7.6% compared with its industry’s increase of 6.4%.

Key Picks

Some better-ranked stocks are Dover Corporation (DOV - Free Report) , Macquarie Infrastructure Company (MIC - Free Report) and ITT Inc. (ITT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dover outpaced estimates in each of the preceding four quarters, the average being 6.70%.

Macquarie surpassed estimates twice in the trailing four quarters, the average positive earnings surprise being 5.34%.

ITT outpaced estimates in each of the preceding four quarters, the average being 7.85%.

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