United Technologies (UTX) Q2 Earnings: Is a Beat in Store?
United Technologies Corporation UTX is scheduled to report second-quarter 2018 results on Jul 24, before the opening bell.
The company has an impressive earnings history, surpassing estimates in each of the trailing four quarters with an average positive surprise of 6.82%. Notably, in the last reported quarter, United Technologies’ adjusted earnings of $1.77 per share surpassed the Zacks Consensus Estimate of $1.51 by 17.22%.
We expect the company to score an earnings beat in the second quarter as well.
Why a Likely Positive Surprise
Our proven model shows that United Technologies has the right combination of the two key ingredients to beat earnings. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:
Earnings ESP: United Technologies has an Earnings ESP of +0.18%.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 Quote
Zacks Rank: The company carries a Zacks Rank #3, which when combined with a positive ESP, makes us reasonably confident of an earnings beat.
Conversely, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Factors Driving the Better-than-Expected Results
Over the past few quarters, United Technologies’ strong aftermarket business has remained a staple growth driver. In fact, its aftermarket services business is relatively stable compared to new product delivery. This, in turn, is allowing the company to offset the negative impact of downturns in the new products market. For instance, in first-quarter 2018, the company’s aftermarket business witnessed strong sales across segments with commercial and military growing 18% and 13%, respectively.
Moreover, the company’s business mix and diversification has allowed it to remain profitable even during tough economic times, delivering persistent earnings and dividend growth. Also, the company’s strong cash flow and disciplined capital deployment strategy enable it to invest in acquisitions and business development. In addition, its continuous investment in innovative products through higher engineering expenditure delivers value to its customers and secures orders that will drive top-line growth.
Amid this backdrop, the Zacks Consensus Estimate for revenues from United Technologies’ Pratt & Whitney segment for the to-be-reported quarter is currently pegged at $4,526 million, reflecting growth of 11.2% year over year. Revenues from UTC Climate Control and Security segment are also anticipated to be strong, with estimates standing at $4,942 million compared with reported revenues of $4,712 million in the year-ago quarter. Further, the UTC Aerospace Systems segment is anticipated to rise 3.7% year over year to $3,774 million.
Furthermore, continued focus on four key priorities to fuel its growth momentum, namely flawless execution, innovation for growth, structural cost reduction and disciplined capital allocation is likely to translate to improved performance in the quarter.
Other Stocks to Consider
Here are some other companies that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter:
Boise Cascade, L.L.C. BCC has an Earnings ESP of +14.97% and a Zacks Rank #1.You can see the complete list of today’s Zacks #1 Rank stocks here.
Honeywell International Inc. HON has an Earnings ESP of +0.16% and a Zacks Rank #2.
ITT Inc. ITT has an Earnings ESP of +0.17% and a Zacks Rank #3.
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