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United Technologies (UTX) Beats Q3 Earnings, 2017 View Up

United Technologies Corporation UTX reported solid third-quarter 2017 results driven by superior organic growth and diligent execution of operational plans. GAAP earnings from continuing operations for the reported quarter were $1.67 per share compared with $1.74 in the year-earlier quarter. Excluding restructuring and other non-recurring items, adjusted earnings for the reported quarter were $1.73 per share, which beat the Zacks Consensus Estimate by 5 cents.

Net sales in the reported quarter came in at $15,062 million compared with $14,354 million in the year-ago quarter and exceeded the Zacks Consensus Estimate of $14,886 million.  The superior top-line growth was primarily attributable to organic growth of 6% – the highest such growth reported since 2011.

United Technologies Corporation Price, Consensus and EPS Surprise

 

United Technologies Corporation Price, Consensus and EPS Surprise | United Technologies Corporation Quote

Segmental Details

Net sales of Otis were $3,156 million compared with $3,018 million in the prior-year quarter.

Aggregate quarterly revenues of UTC Climate, Controls & Security came in at $4,688 million compared with $4,415 million in the year-ago quarter.

Pratt & Whitney revenues were $3,871 million, up from $3,501 million in the year-ago quarter.

Sales of UTC Aerospace Systems in the quarter came in at $3,637 million, marginally down from $3,646 million in the year-earlier quarter.

Costs and Margins

Operating profit for the reported quarter was $2,163 million compared with $2,251 million in the year-ago period. Despite top-line growth, operating profit for the quarter decreased year over year due to higher operating expenses.

Operating income for Otis decreased 5% year over year to $614 million for operating margin of 17.6%. Operating income of UTC Climate, Controls & Security increased 3.4% year over year to $828 million for operating margin of 17.7%. Operating profit of Pratt & Whitney declined 32.6% year over year to $229 million for operating margin of 5.9%. Operating profit of UTC Aerospace Systems improved 2.7% year over year to $616 million for operating margin of 16.9%.

Balance Sheet and Cash Flow

United Technologies exited the third quarter with cash and cash equivalents of $8,523 million, while long-term debt was $24,063 million.

For the first nine months of 2017, United Technologies generated net cash of $3,110 million from its operating activities, down from $4,567 million recorded in the year-ago period.

Outlook

United Technologies is poised to grow on the back of innovation investments, robust backlog and strategic cost-reduction efforts. With strong third-quarter results, the company raised its full-year 2017 earnings guidance. Adjusted earnings are currently anticipated to lie within the $6.58–$6.63 per share range, as against the previously estimated range of $6.45−$6.60. Additionally, this Zacks Rank #3 (Hold) company lifted its revenue guidance for 2017 from the previous projection of $58.5–$59.5 billion to $59–$59.5 billion (estimating an organic growth of 3–4% year over year).

Stocks to Consider

Some better-ranked stocks in the industry include Danaher Corporation DHR, Honeywell International Inc. HON and Leucadia National Corporation LUK, each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Danaher has a long-term earnings growth expectation of 11.7%. It has beaten earnings estimates in each of the trailing four quarters with an average positive surprise of 2.6%.

Honeywell has a long-term earnings growth expectation of 9.4%. It has beaten earnings estimates thrice in each of the trailing four quarters with an average positive surprise of 2.1%.

Leucadia has a long-term earnings growth expectation of 18%. It has beaten earnings estimates twice in the trailing four quarters with an average positive surprise of 5.4%.

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