A month has gone by since the last earnings report for United Technologies (UTX). Shares have lost about 3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is United Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
United Technologies Q1 Earnings Top, EPS View Revised
United Technologies reported better-than-expected first-quarter 2019 results. Quarterly adjusted earnings came in at $1.91 per share, surpassing the Zacks Consensus Estimate of $1.75. The bottom line was also higher than the year-ago figure of $1.77.
Revenues came in at $18,365 million, up 20.5% year over year. The top line also outpaced the consensus estimate of $18,068 million. The improvement was driven by 8% contribution from organic sales growth and 15% positive impact of acquisitions, partially offset by 3% negative impact of currency translation.
Otis’ revenues for the reported quarter were $3,096 million, up 1.9% year over year. Aggregate sales for the Carrier segment totaled $4,323 million, down 1.2%. Pratt & Whitney’s first-quarter revenues were $4,817 million, up 11% from the year-ago quarter. The top-line performance of the Collins Aerospace Systems improved 70.6% to $6,513 million.
Costs and Margins
Cost of products and services sold during the March-end quarter was $13,707 million, up 21.5% year over year.
Selling, general and administrative expenses in the first quarter jumped 16.7% to $1,997 million.
Adjusted operating margin was 13.7%, up 10 basis points.
Balance Sheet/Cash Flow
Exiting the first quarter, United Technologies had cash and cash equivalents of $6,240 million, up from $6,152 million as of Dec 31, 2018. Long-term debt was $41,004 million, down from $41,192 million recorded at the end of 2018.
During the January-March quarter, the company generated $1,500 million cash from operating activities compared with $453 million generated a year ago. Its capital expenditures were up 7.7% to $363 million.
United Technologies has revised 2019 earnings view to $7.80-$8.00 per share from the prior guidance of $7.70-$8.00. For 2019, it continues to expect revenues between $75.5 billion and $77 billion. Notably, the company expects 3-5% organic sales growth in 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, United Technologies has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, United Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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