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Beat in the Cards for United Technologies (UTX) Q3 Earnings?

Zacks Equity Research

United Technologies Corporation UTX is set to release third-quarter 2019 results on Oct 22, before market open.

The company’s earnings of $2.20 per share topped the Zacks Consensus Estimate of $2.04 by 7.84% in the second quarter.

In the past three months, the stock has rallied 4.4% against the industry’s decline of 4.1%.



Why a Likely Positive Surprise

Our proven model predicts an earnings beat for United Technologies this time around. The combination a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: United Technologies has an Earnings ESP of +0.99% as the Most Accurate Estimate is pegged at $2.05, higher than the Zacks Consensus Estimate of $2.03. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

United Technologies Corporation Price and EPS Surprise

United Technologies Corporation Price and EPS Surprise

United Technologies Corporation price-eps-surprise | United Technologies Corporation Quote

Zacks Rank: The company carries a Zacks Rank #3.

Key Factors

United Technologies is likely to have benefited from strength in its end markets during the third quarter. Its aerospace business’ sales jumped sequentially in the second quarter, a trend that most likely continued in the third quarter owing to the ramp up in military programs, robust global air traffic, and solid demand for modifications and upgrades, including avionics. In addition, the company’s commercial business is likely to have performed well in the third quarter on account of strong non-residential construction activity in the United States and solid project awards.

Strong commercial aftermarket and military businesses coupled with increasing demand for next generation products might have boosted revenues for Collins Aerospace Systems segment. Also, strength in commercial OEM (Original Equipment Manufacturer) and commercial aftermarket businesses, is expected to have contributed significantly in the company’s Pratt & Whitney revenues. In addition, robust orders for the company’s Geared Turbofan engines are likely to have increased this segment’s sales.

For Otis, favorable mix in new equipment orders in China is likely to have acted as a tailwind. However, operating results are likely to reflect the impact of forex issues. United Technologies’ Carrier segment might have benefited from strong orders in North America residential and Commercial HVAC end markets. The segment’s operating performance is likely to have gained from the company’s cost reduction actions and productivity initiatives. However, softness in its equipment orders due to weak transport refrigeration orders might have affected the Carrier segment.

Moreover, rising costs of sales and high R&D costs are likely to have adversely impacted its margin and profitability in the third quarter.

Other Key Picks

Here are some other companies you may want to consider as our model shows that these have the right mix of elements to beat estimates this earnings season:

Cintas Corporation CTAS has an Earnings ESP of +0.16% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chart Industries, Inc. GTLS has an Earnings ESP of +0.96% and a Zacks Rank of 3.

Sealed Air Corporation SEE has an Earnings ESP of +2.40% and a Zacks Rank #3.

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