United Technologies Q4 Earnings: Can UTX Hit Its $1.83 EPS Target?

in EARNINGS/INVESTING IDEAS by

United Technologies Corporation (NYSE:UTX) is scheduled to report Q4 earnings results on January 28, 2020. The company is expected to report earnings of $1.83/share on revenue of $19.43 billion.

The consensus earnings per share (EPS) of $1.83/share is based on a poll of 15 analysts and represents a decline of -6.2% over the same quarter last year when the company reported earnings of $1.95/share.

The revenue forecast of $19.43 billion based on a poll of 14 analysts implies a year-over-year (YoY) growth of 7.7%. Last year the company reported $18.044 billion in revenue for the quarter.

Expected to report EPS decline of -$0.12/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $19,429.50 $18,044.00 7.7%
EPS $1.83 $1.95 -6.2%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from United Technologies for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $2.03 $2.21 8.8% Beat
Q2, 2019 $2.05 $2.20 7.6% Beat
Q1, 2019 $1.72 $1.91 11.0% Beat
Q4, 2018 $1.53 $1.95 27.2% Beat
Q3, 2018 $1.81 $1.93 6.6% Beat
Q2, 2018 $1.88 $1.97 4.8% Beat
Q1, 2018 $1.50 $1.77 18.0% Beat
Q4, 2017 $1.56 $1.60 2.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending September 30, 2019, the stock price reacted by increasing by 1.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-22 $138.35 $139.91 1.1% Increase
2019-07-23 $132.95 $134.25 1.0% Increase
2019-04-23 $136.91 $139.59 2.0% Increase
2019-01-23 $111.06 $115.56 4.1% Increase

Fundamentals And Technical Analysis

United Technologies is currently trading at $154.88/share, up 0.3% for the day. The company is trading at approximately 99.6% of its 52-week high of $155.53/share. The company’s stock price is up 10.7% since the last earnings report and up 2.2% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 68.21 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:UTX Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 24.1x and a forward P/E multiple of 18.7x.

United Technologies’s current share price also implies a price-to-book (P/B) multiple of 3.3x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 30, 2019
Stock Price (Current) $154.88
P/E Ratio 24.1x
P/E Ratio (Fwd) 18.7x
PEG Ratio 2.9
Total Debt to Capital (%) 26.0%
Levered Free Cash Flow $5.967 billion
Enterprise Value / EBITDA 12.1x

Source: Finbox

Company Profile: United Technologies Corporation

United Technologies Corporation is a large-cap stock with a market capitalization of $131.8 billion and a total enterprise value of $174.2 billion. The company operates in the Industrials sector and the Aerospace & Defense industry.

United Technologies Corporation provides technology products and services to building systems and aerospace industries worldwide.

Its Otis segment designs, manufactures, sells, and installs passenger and freight elevators, escalators, and moving walkways; and offers modernization products to upgrade elevators and escalators, as well as maintenance and repair services.

The company’s Carrier segment provides heating, ventilating, air conditioning, refrigeration, fire, security, and building automation products, solutions, and services for commercial, government, infrastructure, residential, and refrigeration and transportation applications. This segment also offers building services, including audit, design, installation, system integration, repair, maintenance, and monitoring.

Its Pratt & Whitney segment supplies aircraft engines for commercial, military, business jet, and general aviation markets; and provides aftermarket maintenance, repair, and overhaul, as well as fleet management services.

The company’s Collins Aerospace Systems segment provides electric power generation, power management, and distribution systems; air data and aircraft sensing systems; engine control, intelligence, surveillance, and reconnaissance systems; engine components; environmental control systems; fire and ice detection, and protection systems; propeller systems; engine nacelle systems; aircraft lighting, seating, and cargo systems; actuation and landing systems; space products and subsystems; avionics systems; flight controls, communications, navigation, oxygen, and training systems; food and beverage preparation, and storage and galley systems; and lavatory and wastewater management systems.

The company offers its services through manufacturers’ representatives, distributors, wholesalers, dealers, retail outlets, and sales representatives, as well as directly to customers.

United Technologies Corporation was founded in 1934 and is headquartered in Farmington, Connecticut.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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