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In the last reported quarter, OTIS’ earnings beat the Zacks Consensus Estimate by 1.1% and rose 10% year over year. Net sales lagged the consensus mark by 0.2% but gained 2.7% year over year.
Otis’ earnings topped the consensus mark in each of the last 17 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has been stable at $1.03 in the past 60 days. The estimated figure indicates a rise of 12% from the year-ago quarter.
The consensus mark for net sales is pegged at $3.73 billion, indicating a 0.3% increase from the year-ago reported figure of $3.72 billion.
Key Factors to Note
The world's leading elevator and escalator company’s second-quarter 2024 performance is likely to have benefited from higher volume, favorable pricing and improved productivity. Also, the company's focus on acquisitions, product innovations and the integration of new technologies driven by ongoing research and development efforts is likely to have aided its second-quarter performance.
However, increased interest expense is likely to have impacted sales and thereby adjusted earnings in the to-be-reported quarter.
For the to-be-reported quarter, OTIS projects low single-digit overall organic growth and flat year over year, considering the deterioration in foreign currency rates.
Within the Service segment, Otis anticipates revenues to be the same as in the first quarter. The segment order growth is expected to remain above 4% for the maintenance portfolio and more than 10% for Modernization. Our model suggests revenues to rise 6.1% to $2.24 billion compared with the prior year.
However, for the New Equipment unit, the company expects revenues to be down in the mid-single digits organically, due to China headwinds and a tough comparison with approximately 10% growth reported in the prior year. Also, it expects orders to be down by mid to high-single digits due to more challenged market conditions. Nonetheless, the backlog is anticipated to be steady sequentially. Our model predicts New Equipment revenues to decline 5.8% year over year to $1.51 billion.
Besides revenues and orders, New Equipment operating margins are anticipated to be nearly 7%, while Service operating margins are likely to be the same as in the first quarter or slightly higher. We project operating margins of 16.4% in the second quarter.
Meanwhile, the company noted that its second-quarter bottom line is likely to have benefited from the timing of certain tax benefits and lower share count. Also, muted currency headwinds may surge earnings by 10 cents in the to-be-reported quarter.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Otis this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as elaborated below.
Earnings ESP: Otis has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Otis carries a Zacks Rank #3.
Stocks With the Favorable Combination
Here are some companies in the Zacks Construction sector that, per our model, have the right combination of elements to beat on earnings in the quarter to be reported.
MTH’s earnings topped the consensus mark in all the last four quarters, with the average being 27%. Earnings for the to-be-reported quarter are expected to grow 3% year over year.
Dycom Industries (DY - Free Report) has an Earnings ESP of +4.43% and carries a Zacks Rank #2.
DY’s earnings beat the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 30.2%. Earnings for the to-be-reported quarter are expected to grow 7.4% year over year.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +0.82% and carries a Zacks Rank #3.
KBR’s earnings beat the consensus mark in the last four quarters, the average surprise being 5%. Earnings for the to-be-reported quarter are expected to grow 6.8% year over year.
Image: Bigstock
OTIS Gears Up to Report Q2 Earnings: Key Factors to Consider
Otis Worldwide Corporation (OTIS - Free Report) is scheduled to report second-quarter 2024 results on Jul 24, before the opening bell.
In the last reported quarter, OTIS’ earnings beat the Zacks Consensus Estimate by 1.1% and rose 10% year over year. Net sales lagged the consensus mark by 0.2% but gained 2.7% year over year.
Otis’ earnings topped the consensus mark in each of the last 17 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has been stable at $1.03 in the past 60 days. The estimated figure indicates a rise of 12% from the year-ago quarter.
Otis Worldwide Corporation Price and EPS Surprise
Otis Worldwide Corporation price-eps-surprise | Otis Worldwide Corporation Quote
The consensus mark for net sales is pegged at $3.73 billion, indicating a 0.3% increase from the year-ago reported figure of $3.72 billion.
Key Factors to Note
The world's leading elevator and escalator company’s second-quarter 2024 performance is likely to have benefited from higher volume, favorable pricing and improved productivity. Also, the company's focus on acquisitions, product innovations and the integration of new technologies driven by ongoing research and development efforts is likely to have aided its second-quarter performance.
However, increased interest expense is likely to have impacted sales and thereby adjusted earnings in the to-be-reported quarter.
For the to-be-reported quarter, OTIS projects low single-digit overall organic growth and flat year over year, considering the deterioration in foreign currency rates.
Within the Service segment, Otis anticipates revenues to be the same as in the first quarter. The segment order growth is expected to remain above 4% for the maintenance portfolio and more than 10% for Modernization. Our model suggests revenues to rise 6.1% to $2.24 billion compared with the prior year.
However, for the New Equipment unit, the company expects revenues to be down in the mid-single digits organically, due to China headwinds and a tough comparison with approximately 10% growth reported in the prior year. Also, it expects orders to be down by mid to high-single digits due to more challenged market conditions. Nonetheless, the backlog is anticipated to be steady sequentially. Our model predicts New Equipment revenues to decline 5.8% year over year to $1.51 billion.
Besides revenues and orders, New Equipment operating margins are anticipated to be nearly 7%, while Service operating margins are likely to be the same as in the first quarter or slightly higher. We project operating margins of 16.4% in the second quarter.
Meanwhile, the company noted that its second-quarter bottom line is likely to have benefited from the timing of certain tax benefits and lower share count. Also, muted currency headwinds may surge earnings by 10 cents in the to-be-reported quarter.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Otis this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as elaborated below.
Earnings ESP: Otis has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Otis carries a Zacks Rank #3.
Stocks With the Favorable Combination
Here are some companies in the Zacks Construction sector that, per our model, have the right combination of elements to beat on earnings in the quarter to be reported.
Meritage Homes Corporation (MTH - Free Report) has an Earnings ESP of +0.64% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
MTH’s earnings topped the consensus mark in all the last four quarters, with the average being 27%. Earnings for the to-be-reported quarter are expected to grow 3% year over year.
Dycom Industries (DY - Free Report) has an Earnings ESP of +4.43% and carries a Zacks Rank #2.
DY’s earnings beat the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 30.2%. Earnings for the to-be-reported quarter are expected to grow 7.4% year over year.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +0.82% and carries a Zacks Rank #3.
KBR’s earnings beat the consensus mark in the last four quarters, the average surprise being 5%. Earnings for the to-be-reported quarter are expected to grow 6.8% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.