Otis Worldwide Corp. (OTIS) is the largest global elevator and escalator supplier by revenue. It operates a razor and blade model where it manufactures and installs elevators at a low profit to build an installed base that will provide high profits from service in the years thereafter.
OTIS was spun off from United Technologies in April, as United merged with Raytheon (RTX). Now that it is on its own, the company can focus on long-term growth through cost cutting and market share gains. The company has a 17% global market share and is making inroads in China, the world’s largest elevator market, with its Internet of Things (IoT) Otis One initiative.
As of the end of its most recent quarter, the company had $1.7 billion in cash, compared with long-term debt of $5.5 billion. Though the company has a current ratio of 1, which indicates it can meet short-term obligations.
The company is expected to grow earnings 6.5% next year and at an average of 8.63% over the next five years. Revenue is expected to grow 4.5% next year. The company is a tad overvalued with a P/E of 38.
Its stock has shown bearish near-term momentum, but is up considerably over the past year.
Take a look at the 1-year chart of OTIS below with added notations…
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