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United Technologies to Develop Electric Power Systems Lab

Zacks Equity Research

United Technologies Corporation’s UTX unit, Collins Aerospace Systems, recently unveiled its $50-million investment plan for a modern electric power systems laboratory, namely The Grid in Rockford, IL. This investment constitutes a portion of Collins Aerospace’s total investment plan of $150 million targeted at electric systems over the coming three years. Notably, the development of the 25,000-square-foot laboratory is already in progress and is likely to be functional by 2021.

On completion, the facility will be dubbed as the most advanced electric power systems laboratory in the industry. This will support Collins Aerospace in designing and testing high-power generator systems for the next generation of electric aircraft including business aviation, commercial, military, UAV and urban air mobility platforms.

As a matter of fact, The Grid will also allow the company’s advanced products group in developing a hybrid-electric flight demonstrator platform, dubbed as Project 804. The facility will support the project’s objective to re-engine a regional turboprop aircraft driven by a hybrid-electric propulsion system.

The facility will enable the company to develop and test a 1 megawatt motor, motor controller and battery system. This will in turn ensure the success of the project. Notably, once developed, the 1 megawatt motor will be the most power dense and fuel-efficient as yet in the aerospace industry.

Existing Business Scenario

United Technologies is well poised to gain from strength in commercial and military aftermarket businesses, coupled with continued revenue passenger mile growth in the quarters ahead. Also, growth in GTF engine production, continued investment in innovation and service transformation, as well as launch of new products, particularly at the Carrier segment, are likely to drive the company's Commercial business revenues.

It intends to become more competent on the back of meaningful business acquisitions. In this regard, the buyout of Rockwell Collins (completed in November 2018) is worth mentioning. Notably, this deal is expected to not only fortify the company's existing product portfolio but also aid in launching innovative solutions for aerospace customers. Moreover, the acquisition of S2 Security (in October 2018) and Predikto (in August 2018) will likely strengthen its revenues and profitability.

In the past three months, the Zacks Rank #2 (Buy) company has returned 24.1%, outperforming the industry’s gain of 18.7%.



Other Key Picks

Other top-ranked stocks in the same space include Carlisle Companies Incorporated CSL, Federal Signal Corporation FSS and Macquarie Infrastructure Company MIC. While Carlisle sports a Zacks Rank #1 (Strong Buy), both Federal Signal and Macquarie carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carlisle surpassed estimates thrice in the trailing four quarters, with the average positive surprise being 15.00%.

Federal Signal exceeded estimates in each of the trailing four quarters, with the average being 21.65%.

Macquarie surpassed estimates twice in the trailing four quarters, with the average positive surprise being 0.51%.

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