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Why Investors Should Buy Otis Worldwide (OTIS) Stock Now
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Otis Worldwide Corporation (OTIS - Free Report) is well poised for 2022, given its focus on innovation and consistent investments in research and development ("R&D"). OTIS’ solid performance is a testament to this fact.
Shares of this leading elevator and escalator manufacturer have gained 12.3% over the past year against the industry’s 10.6% decline.
Despite inflationary pressures, the company delivered 8.9% organic growth in 2021 and registered 19.4% growth in adjusted EPS. The upside was due to its consistent commitment to the company’s long-term strategy and innovative solutions as well as services to customers. Despite the ongoing macro challenges last year, OTIS achieved broad-based organic sales growth and margin expansion, grew the maintenance portfolio at the highest rate in more than 10 years and gained a share in New Equipment for the second consecutive year.
Earnings estimates for 2022 have also increased to $3.28 per share from $3.22 over the past 60 days, depicting analysts’ optimism over the company’s prospects.
Focus on Digital Innovation & R&D: OTIS’ emphasis on innovation is core to its strategy. In 2021, it invested $159 million or 1.1% of net sales in R&D after investing $152 million in 2020. Otis Worldwide also invested about $59 million in digital and strategic initiatives in 2021. Otis Worldwide connects global R&D efforts through an operating model that sets global and local priorities based on customer and segment needs. In 2021, it launched the successors to the Gen2 family of elevators: the Gen3 and Gen360 digital elevator platforms. These platforms enhance the space-saving, energy-efficient design of the Gen2 elevator with the connectivity of the Otis ONE IoT (Internet of things) digital service platform.
In 2022, it expects to continue innovating and expanding the digital ecosystem and suite of digital solutions for both the existing service portfolio customers and new equipment shipments from factories.
At 2021-end, OTIS had 11 R&D centers and 18 factories across the world, primarily in China, India, France, Spain and the United States. In fact, these centers are strategically placed to enable the efficient development of engineering solutions.
Positive View: Otis Worldwide has been posting impressive results over the last few quarters. For 2021, it reported adjusted earnings growth of 19.4% and net sales improvement of 12.1% from the 2020 level.
Backed by strong results for 2021, the company expects net sales within $14.4-$14.7 billion for 2022, 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, indicating $95-$165 million growth at constant currency.
Adjusted earnings are anticipated to be $3.20-$3.30, suggesting 6-10% year-over-year growth.
Strong Liquidity Position: OTIS has been maintaining a strong liquidity position to navigate through the current challenging environment. The company ended 2021 with $1.57 billion in cash and cash equivalents and a $1.5-billion unsecured, unsubordinated five-year revolving credit facility.
As of Dec 31, 2021, its long-term debt totaled $7.25 billion, up from $5.26 million at 2020-end. Yet, OTIS’ current cash level is sufficient to meet the short-term obligation of $24 million. Also, it has no significant debt maturity until 2023.
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Fluor Corporation (FLR - Free Report) — a Zacks Rank #2 company — is gaining from the "Building a Better Future" initiative, which is focused on enhancing the markets outside the traditional oil and gas sector, fair and balanced commercial deals, financial discipline, and high-performing business culture. It has made significant progress toward strategic goals that comprise the reduction of outstanding debt by 30% and identified ways for more than $150 million in annual cost savings.
FLR’s earnings estimates have increased to $1.34 per share from $1.12 over the past 30 days. The projected figure indicates 42.6% year-over-year growth.
AECOM (ACM - Free Report) — a Zacks Rank #2 company — is a leading solutions provider for supporting professional, technical and management solutions for diverse industries across end markets. ACM has been continuously focusing on delivering industry-leading margins and unlocking capital to promote growth as well as innovation. Also, focus on higher-margin and lower-risk Professional Services businesses bodes well.
Over the past 30 days, AECOM’s earnings estimates for fiscal 2022 have increased from $3.35 to $3.40, indicating a 20.6% year-over-year rise.
Sterling Construction Company, Inc. (STRL - Free Report) — a Zacks Rank #2 company — has been benefiting from broad-based growth across the E-Infrastructure, Building and Transportation solutions segments.
In a month’s time, STRL’s earnings estimates for the year have increased from $2.63 to $2.86, suggesting a 33% year-over-year increase.
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Why Investors Should Buy Otis Worldwide (OTIS) Stock Now
Otis Worldwide Corporation (OTIS - Free Report) is well poised for 2022, given its focus on innovation and consistent investments in research and development ("R&D"). OTIS’ solid performance is a testament to this fact.
Shares of this leading elevator and escalator manufacturer have gained 12.3% over the past year against the industry’s 10.6% decline.
Despite inflationary pressures, the company delivered 8.9% organic growth in 2021 and registered 19.4% growth in adjusted EPS. The upside was due to its consistent commitment to the company’s long-term strategy and innovative solutions as well as services to customers. Despite the ongoing macro challenges last year, OTIS achieved broad-based organic sales growth and margin expansion, grew the maintenance portfolio at the highest rate in more than 10 years and gained a share in New Equipment for the second consecutive year.
Earnings estimates for 2022 have also increased to $3.28 per share from $3.22 over the past 60 days, depicting analysts’ optimism over the company’s prospects.
Image Source: Zacks Investment Research
Let’s delve deeper into the factors supporting this Zacks Rank #2 (Buy) firm’s growth trajectory. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Drivers
Focus on Digital Innovation & R&D: OTIS’ emphasis on innovation is core to its strategy. In 2021, it invested $159 million or 1.1% of net sales in R&D after investing $152 million in 2020. Otis Worldwide also invested about $59 million in digital and strategic initiatives in 2021. Otis Worldwide connects global R&D efforts through an operating model that sets global and local priorities based on customer and segment needs. In 2021, it launched the successors to the Gen2 family of elevators: the Gen3 and Gen360 digital elevator platforms. These platforms enhance the space-saving, energy-efficient design of the Gen2 elevator with the connectivity of the Otis ONE IoT (Internet of things) digital service platform.
In 2022, it expects to continue innovating and expanding the digital ecosystem and suite of digital solutions for both the existing service portfolio customers and new equipment shipments from factories.
At 2021-end, OTIS had 11 R&D centers and 18 factories across the world, primarily in China, India, France, Spain and the United States. In fact, these centers are strategically placed to enable the efficient development of engineering solutions.
Positive View: Otis Worldwide has been posting impressive results over the last few quarters. For 2021, it reported adjusted earnings growth of 19.4% and net sales improvement of 12.1% from the 2020 level.
Backed by strong results for 2021, the company expects net sales within $14.4-$14.7 billion for 2022, 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, indicating $95-$165 million growth at constant currency.
Adjusted earnings are anticipated to be $3.20-$3.30, suggesting 6-10% year-over-year growth.
Strong Liquidity Position: OTIS has been maintaining a strong liquidity position to navigate through the current challenging environment. The company ended 2021 with $1.57 billion in cash and cash equivalents and a $1.5-billion unsecured, unsubordinated five-year revolving credit facility.
As of Dec 31, 2021, its long-term debt totaled $7.25 billion, up from $5.26 million at 2020-end. Yet, OTIS’ current cash level is sufficient to meet the short-term obligation of $24 million. Also, it has no significant debt maturity until 2023.
Other Top-Ranked Stocks From the Broder Construction Sector
Fluor Corporation (FLR - Free Report) — a Zacks Rank #2 company — is gaining from the "Building a Better Future" initiative, which is focused on enhancing the markets outside the traditional oil and gas sector, fair and balanced commercial deals, financial discipline, and high-performing business culture. It has made significant progress toward strategic goals that comprise the reduction of outstanding debt by 30% and identified ways for more than $150 million in annual cost savings.
FLR’s earnings estimates have increased to $1.34 per share from $1.12 over the past 30 days. The projected figure indicates 42.6% year-over-year growth.
AECOM (ACM - Free Report) — a Zacks Rank #2 company — is a leading solutions provider for supporting professional, technical and management solutions for diverse industries across end markets. ACM has been continuously focusing on delivering industry-leading margins and unlocking capital to promote growth as well as innovation. Also, focus on higher-margin and lower-risk Professional Services businesses bodes well.
Over the past 30 days, AECOM’s earnings estimates for fiscal 2022 have increased from $3.35 to $3.40, indicating a 20.6% year-over-year rise.
Sterling Construction Company, Inc. (STRL - Free Report) — a Zacks Rank #2 company — has been benefiting from broad-based growth across the E-Infrastructure, Building and Transportation solutions segments.
In a month’s time, STRL’s earnings estimates for the year have increased from $2.63 to $2.86, suggesting a 33% year-over-year increase.