Shares of diversified business conglomerate United Technologies Corp. (UTX) scaled a 52-week high of $113.04 on Dec 27, before closing the trading session a notch lower at $112.80 for a healthy year-to-date return of 37.3%. United Technologies’ share prices have been on an uptrend since its third quarter 2013 earnings release.
Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock still has enough fundamentals that may further drive the stock upward. The stock is currently trading at a forward P/E of 18.3x and has a long-term earnings growth expectation of 12.5%.
United Technologies reported third quarter 2013 earnings from continuing operations of $1.55 per share, up from $1.37 in the year-ago quarter. The reported earnings also beat the Zacks Consensus Estimate by a couple of cents. Net income improved 13% from the year-ago quarter to $1.4 billion. Recurring earnings for the quarter surged 19.0% year over year to $1.63 per share.
Total revenue for the last reported quarter rose 3% year over year to $15.5 billion, primarily driven by acquisitions. United Technologies expects revenues in 2013 to aggregate about $63 billion with earnings in the range of $6.10 - $6.15 per share.
With sustained order growth momentum in majority of its markets, the company expects organic growth to continue to accelerate till the end of 2013 and beyond. Furthermore, Pratt & Whitney, one of the operating segments of United Technologies has recently procured three Department of Defense contracts worth $355.1 million. These contracts augur well for the long-term growth of the company.
Moreover, investors’ sentiment got a significant boost following the 10% increase in quarterly dividend to 59 cents per share.
Over the last 7 days, the earnings estimates did not show any upward or downward revision for 2013. Although there is a lacuna of estimate revisions, we envision an uptrend for the stock backed by its strong growth potential.
Other Stocks to Consider
Some other players in the industry worth reckoning include CLARCOR Inc. (CLC), ITT Corporation (ITT) and Raven Industries Inc. (RAVN), each carrying a Zacks Rank #2 (Buy).