Tag Archives: utx
United Technologies Corporation (UTX) is a diversified conglomerate, providing high technology products and services to the building systems and aerospace industries worldwide. Despite the mixed earnings results, UTX continues to hold strong cash position while focusing on integration to boost profitability.
For Q1, 2013, revenue increased to $14.4B, which is below analysts’ estimate of $14.9B. However, net income of $1.39 per share is well above the estimate of $1.29 per share. The management also reaffirmed a forecast for full-year profit of $5.86-$6.15 per share on $64B-$65B of sales.
Declining Organic Sales due to Tough Market Conditions
The acquisition of Goodrich and IAE had provided $0.21 of earnings for Q1; however, organic sales declined 2%. However, North America and emerging markets continue to recover while Europe continues to be a headwind. On the positive side, UTX’s portfolio is well positioned for a resumption of top-line growth as the year progresses on.
Integration, Growth, and CapEx
Climate, Controls and Securities continued to realize savings from the integration (profit increased 8% while organic sales declined 3%). Otis, on the other hand, is gaining momentum with two consecutive quarters of sales growth. The CapEx for the quarter was $295M, which was up 60% comparing to the same quarter last year, as the company prepares for the ramp in commercial aerospace.
While the S&P 500 had gained 11.44% year to date, leading conglomerates stocks had been outperforming the market, including General Electric Company (GE) with 13.10% increase, United Technologies Corporation (UTX) with 15.96% advance, and Textron Inc. (TXT) with 20.10% surge as seen from the chart below.
Source: Google Finance
General Electric Company
General Electric Company (GE), with a market cap of $240.41B, is a diversified technology and financial services company and a leader in all markets in which it competes.
GE’s latest M&A move was to acquire Lufkin Industries Inc. (LUFK), which is a move to take advantage of an oil-drilling boom, as reported by Bloomberg. It is a move for GE to buy the synergies and growth, as said by an analyst at William Blair & Co. GE continues to expand into the industrial end and shrink GE Capital, where the last reported ENI balance had been reduced to $419B in Q4, 2012 as compared to $461B in Q1, 2011. GE also took a notable step to divest its 49 percent stake in NBC Universal on February 12, thus to better focus on the industrial market as well as return more capital to shareholders while retaining more cash for future M&A.
Analysts currently have a mean target price of $25.60 for GE, suggesting 10.73% upside potential. Analysts, on average, are estimating an EPS of $0.35 with revenue of $34.70B for the current quarter ending in March, 2013. GE is expected to report its Q1, 2013 earnings on April 19, 2013. In the last four quarters, GE had three positive surprises and one in-line result.