Industrials

What to Expect When United Technologies Releases Q3 Results

Chris Lange

Published: October 21, 2019 12:35 pm

Last Updated: January 30, 2020 2:21 pm

United Technologies Corp. (NYSE: UTX) is scheduled to report its most recent quarterly results before the opening bell on Tuesday. The consensus estimates are $2.03 in earnings per share (EPS) and $19.3 billion in revenue. In the third quarter of last year, the conglomerate said it had $1.93 in EPS and $16.51 billion in revenue.

In the second quarter, the company’s acquisition of Rockwell Collins added 13 percentage points to the company’s 18% year-over-year revenue gain. Another six points of growth was organic, and both were offset by a one-point foreign exchange headwind.

At the same time, Collins Aerospace commercial aftermarket (parts) sales jumped 75% and 18% organically. The segment’s profit margin rose year over year from 14.4% to 17.8%, and operating profit more than doubled from $569 million to $1.17 billion.

Also, the Pratt & Whitney jet engine segment posted sales of $5.15 billion, up 8.7% compared with $4.74 billion in the year-ago quarter, and operating profit was up 6.8% to $424 million on a profit margin of 8.2%.

As for United Technologies on a longer-term scale, the company’s pending merger with Raytheon Co. (NYSE: RTN) is also likely to move Raytheon shares in tandem. The merger is set as a merger of equals, but it is complicated as there is also set to be a separation of Otis (elevators) and Carrier (air conditioning) that will make the company more of a pure-play in defense and aerospace rather than a complicated conglomerate.

Excluding Monday’s move, United Tech had outperformed the broad markets, with its stock up about 28.5% year to date. However, in the past 52 weeks, the stock was up only 5%.

A few analysts weighed in on the stock ahead of the results:

• JPMorgan has an Overweight rating and a $155 price target.
• Credit Suisse has an Outperform rating with a $164 price target.
• Wolfe Research’s Buy rating comes with a $152 target price.
• Sanford Bernstein rates it as Market Perform with a $154 target.
• Cowen has a Buy rating with a $150 target price.
• William Blair has a Hold rating.

Shares of United Tech traded up about 1% at $138.39 on Monday, in a 52-week range of $100.48 to $144.40. The consensus price target is $155.47.