How Did United Technologies Perform In Q2?

The momentum gained in the first quarter has not yet dwindled. United Technologies (NYSE: UTX) managed to beat earnings and revenue estimates yet again by a very comfortable margin this time around. The company managed to post good organic growth figures across all segments. That said, like before, financials at Otis were adversely affected on the continued slowdown in China.  Regardless, management is confident that the company has a lot to offer in the coming year, and have accordingly raised the guidance for the second time this year.

The company now expects revenues to come in the range of $63.5 to $64.5 billion on improved organic growth of 5-6%, in comparison to the previously stated figure of $63-$64.5 billion, while earnings come in at $7.10 to $7.25 per share, in comparison to $6.85-$7.10 per share expected earlier.

Since the previous earnings call, the company’s stock price has appreciated well, and we have accordingly revised our price estimate. In this respect, we have created an interactive dashboard to highlight our valuation method and assumptions to best arrive at our price estimate. Click on the link to create your own forecast.

• The company is expected to conclude the acquisition of Rockwell Collins in Q3. In general, the company and investors alike, are very excited about the integration. Collins Aviation (the name of the combined company), will give the conglomerate the chance to differentiate its products, by adding more intelligent services to its portfolio. This, in turn, will ensure an enhanced customer value, which is expected to help the company gain more market share over the long-term. Additionally, the deal is also expected to deliver at least $500 million in net cost synergies.
• Pratt & Whitney was the star of the quarter at United Tech this time around as well. The segment managed to post a significant 12% increase in organic growth. This figure was driven by robust military sales and increased GTF deliveries. In fact, this was the first ever quarter to record over 200 engine deliveries at the segment in a quarter. We expect the segment to deliver a record number of engines in the year, which is bound to grow the top line even more. In general, Pratt has about seven years of GTF backlog and have close to 9,000 total firm option orders to date.