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United Technologies' Advanced Training Device Chosen by FAA

Zacks Equity Research

Collins Aerospace Systems, a business unit of United Technologies Corporation UTX recently secured an order from the Federal Aviation Administration (“FAA”), an operating body of the U.S. Department of Transportation. The FAA will be using the company’s state-of-the-art Head-Up Display (HUD) Virtual-Reality (VR) training device for scientific research in various fields like pilot performance, pilot-HUD interface and crew workload.

Collins Aerospace is a leading provider of Head-up Guidance System (HGS) and Enhanced Vision System (EVS) technologies for several military and commercial aircraft operators as well as businesses. These technologies are designed to offer increased security to pilots, particularly during low visible and challenging operating conditions. As noted, these technologies also help in performing various military operations, assisting aircrews to accurately identify runways, drop zones and other targets.

The design of the HUD VR device offers high flexibility and efficacy to the FAA experts, required for performing research in advanced vision systems on HUDs.Combined with Collins Aerospace's HGS and EVS, the HUD VR device helps in offering a pilot with high-quality out-of-the-window view. As a matter of fact, the HUD VR device helps in providing a better training option to pilots for approach and landing in tough situations.

Our Take

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 its 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.

However, escalating cost of sales has been a major cause for concern. Notably, in the second and third quarters of 2019, 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 six months, this Zacks Rank #3 (Hold) company has returned 17.4% compared with its industry’s growth of 9.6%.

Stocks to Consider

Some better-ranked stocks are Berry Global Group, Inc. BERY, ABB Ltd ABB and Honeywell International Inc. HON. While Berry Global sports a Zacks Rank #1 (Strong Buy), ABB and Honeywell carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Berry Global delivered average earnings surprise of 0.70% in the trailing four quarters.

ABB pulled off average positive earnings surprise of 2.89% in the trailing four quarters.

Honeywell delivered average earnings surprise of 2.74% in the trailing four quarters.

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