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Otis Worldwide (OTIS) Down 7.1% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Otis Worldwide (OTIS - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Otis Worldwide due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Otis Worldwide Q4 Earnings Top, Sales Lag
Otis Worldwide Corporation reported strong earnings for fourth-quarter 2021. Its earnings surpassed the Zacks Consensus Estimate and improved on a year-over-year basis. Sales improved from the year-ago figure but lagged the consensus mark marginally.
President & CEO of Otis, Judy Marks, said, "Despite ongoing macro challenges in 2021, we achieved consistent and broad-based organic sales growth and margin expansion, grew our maintenance portfolio at the highest rate in over 10 years and gained share in New Equipment for the second consecutive year. Additionally, our continued robust cash flow generation enabled us to strategically deploy capital to create long-term value for all stakeholders. We are confident this momentum will continue in 2022 and beyond, positioning us to deliver on our financial commitments and advance ESG priorities."
Earnings & Revenue Discussion
The company reported quarterly earnings of 72 cents per share, which surpassed the consensus estimate of 68 cents by 5.9% and grew 9.1% from the year-ago figure of 66 cents. The upside was mainly driven by operating profit growth and a lower effective tax rate.
Net sales of $3.57 billion marginally missed the consensus mark of $3.58 million but improved 2.2% on a year-over-year basis backed by solid segmental results. Organically, net sales grew 2.8% year over year for the quarter.
Adjusted operating margin remained stable at 14.6% from the year-ago period, with margin expansion in Service offset by deterioration in the New Equipment business.
Segment Details
New Equipment’s revenues of $1.56 billion increased 2% from the prior-year period, backed by 1.2% organic growth. Organic sales were up 11.9% in Asia, partially offset by 9.5% and 6.3% decline in the Americas and EMEA, respectively. The decline was mainly due to tough business comparison as it recovered from COVID-19 woes a year ago. New Equipment orders were up 7.3% at constant currency. Adjusted operating margin contracted 60 basis points (bps) year over year to 5.3% due to commodity and mix headwinds. New equipment backlog increased 3% at constant currency from the prior year.
Service revenues improved 2.3% year over year to $2.01 billion, backed by a 4% rise in organic sales. Organic maintenance and repair sales grew 4.3%, and organic modernization sales rose 2.2% from the prior-year quarter. Adjusted operating margin registered an improvement of 50 bps year over year to 23%.
Financial Position
Otis had cash and cash equivalents of $1.57 billion as of Dec 31, 2021. This compares unfavorably with 2020-end numbers of $1.78 billion. Long-term debt was $7.25 million as of Dec 31, 2021, up from $5.26 million at 2020-end.
Net cash flows provided by operating activities were $277 million for the fourth quarter, up from $309 million a year ago. Free cash flow totaled $236 million for the quarter, up from $238 million a year ago.
2021 Highlights
Adjusted earnings for 2021 came in at $3.01 per share, reflecting an increase of 19.4% from a year ago. Net sales of $14.3 billion jumped 12.1% from the 2020 level. Adjusted operating margin registered an improvement of 30 bps year over year to 15.3%.
2022 Guidance
For 2022, the company expects net sales to be within $14.4-$14.7 billion, indicating a 1-3% year-over-year increase. Organic sales growth is likely to be 2.5-4.5% (0.5-3% for New Equipment and 4-6% for Service). Adjusted operating profit is projected within $2.24-$2.3 billion, up $95-$165 million at constant currency.
Adjusted earnings are anticipated to be $3.20-$3.30, suggesting 6-10% year-over-year growth. Adjusted effective tax rate is likely to be 27.5-28%. Free cash flow now is expected at $1.6 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Otis Worldwide has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Otis Worldwide has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Otis Worldwide (OTIS) Down 7.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Otis Worldwide (OTIS - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Otis Worldwide due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Otis Worldwide Q4 Earnings Top, Sales Lag
Otis Worldwide Corporation reported strong earnings for fourth-quarter 2021. Its earnings surpassed the Zacks Consensus Estimate and improved on a year-over-year basis. Sales improved from the year-ago figure but lagged the consensus mark marginally.
President & CEO of Otis, Judy Marks, said, "Despite ongoing macro challenges in 2021, we achieved consistent and broad-based organic sales growth and margin expansion, grew our maintenance portfolio at the highest rate in over 10 years and gained share in New Equipment for the second consecutive year. Additionally, our continued robust cash flow generation enabled us to strategically deploy capital to create long-term value for all stakeholders. We are confident this momentum will continue in 2022 and beyond, positioning us to deliver on our financial commitments and advance ESG priorities."
Earnings & Revenue Discussion
The company reported quarterly earnings of 72 cents per share, which surpassed the consensus estimate of 68 cents by 5.9% and grew 9.1% from the year-ago figure of 66 cents. The upside was mainly driven by operating profit growth and a lower effective tax rate.
Net sales of $3.57 billion marginally missed the consensus mark of $3.58 million but improved 2.2% on a year-over-year basis backed by solid segmental results. Organically, net sales grew 2.8% year over year for the quarter.
Adjusted operating margin remained stable at 14.6% from the year-ago period, with margin expansion in Service offset by deterioration in the New Equipment business.
Segment Details
New Equipment’s revenues of $1.56 billion increased 2% from the prior-year period, backed by 1.2% organic growth. Organic sales were up 11.9% in Asia, partially offset by 9.5% and 6.3% decline in the Americas and EMEA, respectively. The decline was mainly due to tough business comparison as it recovered from COVID-19 woes a year ago. New Equipment orders were up 7.3% at constant currency. Adjusted operating margin contracted 60 basis points (bps) year over year to 5.3% due to commodity and mix headwinds. New equipment backlog increased 3% at constant currency from the prior year.
Service revenues improved 2.3% year over year to $2.01 billion, backed by a 4% rise in organic sales. Organic maintenance and repair sales grew 4.3%, and organic modernization sales rose 2.2% from the prior-year quarter. Adjusted operating margin registered an improvement of 50 bps year over year to 23%.
Financial Position
Otis had cash and cash equivalents of $1.57 billion as of Dec 31, 2021. This compares unfavorably with 2020-end numbers of $1.78 billion. Long-term debt was $7.25 million as of Dec 31, 2021, up from $5.26 million at 2020-end.
Net cash flows provided by operating activities were $277 million for the fourth quarter, up from $309 million a year ago. Free cash flow totaled $236 million for the quarter, up from $238 million a year ago.
2021 Highlights
Adjusted earnings for 2021 came in at $3.01 per share, reflecting an increase of 19.4% from a year ago. Net sales of $14.3 billion jumped 12.1% from the 2020 level. Adjusted operating margin registered an improvement of 30 bps year over year to 15.3%.
2022 Guidance
For 2022, the company expects net sales to be within $14.4-$14.7 billion, indicating a 1-3% year-over-year increase. Organic sales growth is likely to be 2.5-4.5% (0.5-3% for New Equipment and 4-6% for Service). Adjusted operating profit is projected within $2.24-$2.3 billion, up $95-$165 million at constant currency.
Adjusted earnings are anticipated to be $3.20-$3.30, suggesting 6-10% year-over-year growth. Adjusted effective tax rate is likely to be 27.5-28%. Free cash flow now is expected at $1.6 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Otis Worldwide has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Otis Worldwide has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.