United Technologies Corp. (NYSE: UTX) is one of the conglomerate stocks that is sometimes overlooked, despite being a member of the Dow Jones Industrial Average. Tuesday’s earnings report may change at least some of that after reporting its third-quarter profit of $1.85 billion. With a market cap of almost $94 billion now, United Tech may be on its way back to a $100 billion market cap. For most investors, this would make UTC a mega-cap company again.
United Tech reported earnings of $2.04 per share, but the adjusted figure outside of gains and other items was $1.82 per share. That beat the Thomson Reuters consensus estimate by a penny per share. Revenue was up over 4% from the same period of a year ago to $16.17 billion. This was right in line with the $16.16 billion consensus that Thomson Reuters was calling for, but it was under the Zacks forecast of $16.21 billion.
The conglomerate making engines, security, elevators, helicopters and many more products said that it is now expecting full 2014 earnings to be $6.75 to $6.85 per share. Revenue was put at roughly $65 billion for the full year. Thomson Reuters has a consensus of $6.84 per share in earnings and $65.26 billion in revenue.
Cash flow from operations was $1.9 billion and capital spending was $415 million in the quarter. UTC spent some $425 million in share repurchases, and now the company sees share repurchases of about $1.5 billion for the year, versus its previous expectation of $1.35 billion.
United Technologies shares were down more than 10% so far in 2014. As far as whether it can reach a $100 billion market cap from nearly $94 billion now, UTC has already been there — the $102.30 share price compares to a 52-week trading range of $97.30 to $120.66.
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United Tech is currently valued by the stock market at just under 14 times expected 2014 earnings per share. That valuation is not expensive against the broad market, nor against industrial conglomerates and industrial giants. That being said, the valuation is also predicated on earnings rising from $6.84 per share in 2014 to $7.39 in 2015.
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