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What's in Store for United Technologies' (UTX) Q1 Earnings?

Zacks Equity Research

United Technologies Corporation UTX is set to release first-quarter 2019 results on Apr 23, before market open.

The company reported better-than-expected results in the last four quarters, the average positive earnings surprise being 14.87%. Its earnings of $1.95 per share topped the Zacks Consensus Estimate of $1.51 in the last reported quarter.

In the past three months, the company’s shares have rallied 19.2% compared with the industry’s rise of 13.5%.

Let’s see how things are shaping up for this announcement.

Factors to Influence Q1 Results

United Technologies’ aerospace business is likely to gain from strength in commercial and military aftermarket businesses in the first quarter. Also, high construction activity in the United States and continued investments in innovation and service transformation are likely to benefit its commercial business.

Coming to operating segments, strength in the commercial aftermarket business with increasing demand for next generation product will drive revenues for Collins Aerospace Systems segment in the quarter. For Pratt & Whitney, persistent strong demand for commercial and military engines coupled with continued strength in the aftermarket will benefit sales.

For Otis, increased infrastructure spending in China, higher new equipment and service orders along with investment in service transformation and cost reduction initiatives are likely to be tailwinds. However, operating results will be partially offset by forex issues. Notably, the Zacks Consensus Estimate for the segment’s first-quarter operating profits is currently pegged at $443 million compared with $450 million reported a year ago.

For Carrier, growth in North America residential heating, ventilation and air conditioning (HVAC) and global commercial HVAC end markets, and investments in new products are likely to drive its first-quarter organic sales. The segment’s operating results are likely to gain from effective pricing actions and strong productivity. However, forex issues are likely to weigh on it.

Also, United Technologies is currently experiencing higher input costs and restructuring expenses, which are likely to hurt its first-quarter results. In addition, high R&D costs could be a drag on the its profitability.  Further, huge debt levels can be detrimental to its financials in the quarter.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) for a likely earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here as we will see below.

Earnings ESPUnited Technologies has an Earnings ESP of 0.00%, as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.75.

United Technologies Corporation Price and EPS Surprise

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

Zacks Rank: The company carries a Zacks Rank #3 (Hold), which when combined with ESP of 0.00% makes surprise prediction difficult.

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Key Picks

Here are some companies you may want to consider as our model shows that these have the right combination of elements to beat estimates this earnings season:

Chart Industries, Inc. GTLS has an Earnings ESP of +8.66% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Colfax Corporation CFX has an Earnings ESP of +0.91% and a Zacks Rank #3.

ITT Inc. ITT has an Earnings ESP of +1.06% and a Zacks Rank #3.

Zacks' Top 10 Stocks for 2019

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