Otis Worldwide (OTIS) AI Stock Analysis

• Market Cap: $34.88B
• Dividend Yield: 1.88%
• Average Volume (3M): 2.32M
• Price to Earnings (P/E): 26.5
• Beta (1Y): 0.50
• Revenue Growth: 0.73%
• EPS Growth: -15.57%
• Country: US
• Employees: 72,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 1.05
• Shares Outstanding: 389,715,850
• 10 Day Avg. Volume: 1,831,489
• 30 Day Avg. Volume: 2,318,521
• PEG Ratio: 1.13
• Price to Book (P/B): -7.67
• Price to Sales (P/S): 2.61
• P/FCF Ratio: 25.89
• Enterprise Value/Market Cap: 1.25
• Enterprise Value/Revenue: 3.05
• Enterprise Value/Gross Profit: 10.04
• Enterprise Value/Ebitda: 19.42
• 1Y Price Target: $101.50
• Price Target Upside: 13.05% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 67 Neutral
• Price Target: $101.00 ▲(12.50% Upside)

Otis Worldwide's overall stock score is driven by strong earnings call performance and positive technical indicators. Despite financial challenges related to high leverage and declining profitability, the company's focus on service and modernization provides a solid growth outlook. Valuation concerns and market challenges in the New Equipment segment temper the overall score.

Positive Factors

Service Segment Growth

The strong growth in the Service segment, with improved margins, highlights Otis's ability to generate stable, recurring revenue, supporting long-term financial health.

Modernization Orders

Significant growth in modernization orders and backlog suggests robust demand for upgrades, ensuring sustained revenue streams and market relevance.

Innovation and Recognition

Recognition and new product launches demonstrate Otis's commitment to innovation, enhancing its competitive edge and market position.

Negative Factors

High Leverage

High leverage poses financial risks, potentially limiting Otis's ability to invest in growth and weather economic downturns, impacting long-term stability.

New Equipment Sales Decline

Declining sales in the New Equipment segment, especially in key markets like China, could hinder revenue growth and market share expansion.

Free Cash Flow Decline

A significant drop in free cash flow growth can strain Otis's ability to fund operations, invest in new projects, and return capital to shareholders.

Otis Worldwide Business Overview & Revenue Model

Company Description

Otis Worldwide Corporation manufactures, installs, and services elevators and escalators in the United States, China, and internationally. The company operates in two segments, New Equipment and Service. The New Equipment segment designs, manufactures, sells, and installs a range of passenger and freight elevators, as well as escalators and moving walkways for residential and commercial buildings, and infrastructure projects. The Service segment performs maintenance and repair services, as well as modernization services to upgrade elevators and escalators. It had a network of approximately 34,000 service mechanics operating approximately 1,400 branches and offices. The company was founded in 1853 and is headquartered in Farmington, Connecticut.

How the Company Makes Money

Otis generates revenue through two main streams: the sale of new equipment and ongoing service contracts. The New Equipment segment includes the design, manufacturing, and installation of elevators and escalators, which typically involves significant upfront capital investment from customers. The Service segment, which constitutes a substantial portion of Otis's revenue, includes maintenance, modernization, and repair services for existing installations. This recurring revenue model benefits from long-term contracts, providing a steady cash flow. Additionally, strategic partnerships with construction firms and property developers enhance Otis's market reach. The company's investments in technology, such as smart elevators and predictive maintenance systems, also help drive revenue by attracting customers seeking advanced solutions that improve operational efficiency.

Otis Worldwide Financial Statement Overview

Summary

Otis Worldwide demonstrates solid revenue growth and operational efficiency, but faces challenges with high leverage and declining profitability margins. The cash flow position is stable, but the significant drop in free cash flow growth is a concern. Overall, while the company shows strengths in revenue generation and operational margins, financial stability is impacted by high debt levels and negative equity.

Income Statement

Otis Worldwide shows a stable revenue growth trajectory with a TTM revenue growth rate of 1.2%. The gross profit margin is healthy at approximately 30.4%, indicating efficient cost management. However, the net profit margin has decreased to 9.4% in the TTM, reflecting some pressure on profitability. The EBIT and EBITDA margins remain stable, suggesting consistent operational efficiency.

Balance Sheet

The balance sheet reveals a negative stockholders' equity, leading to a high debt-to-equity ratio of -1.57, which indicates significant leverage and potential financial risk. The return on equity is negative, reflecting challenges in generating returns for shareholders. The equity ratio is also negative, highlighting a reliance on debt financing.

Cash Flow

Cash flow analysis shows a decline in free cash flow growth by -185.5% in the TTM, which is concerning. However, the operating cash flow to net income ratio is stable, and the free cash flow to net income ratio remains strong at 90.1%, indicating good cash conversion from profits.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	14.31B	14.26B	14.21B	13.69B	14.30B	12.76B
Gross Profit	4.35B	4.26B	4.23B	3.94B	4.21B	3.80B
EBITDA	2.25B	2.23B	2.37B	2.22B	2.30B	1.82B
Net Income	1.35B	1.65B	1.41B	1.25B	1.25B	906.00M
Balance Sheet
Total Assets	10.77B	11.32B	10.12B	9.82B	12.28B	10.71B
Cash, Cash Equivalents and Short-Term Investments	840.00M	2.30B	1.27B	1.19B	1.56B	1.78B
Total Debt	8.49B	8.74B	7.31B	7.21B	7.79B	6.50B
Total Liabilities	16.06B	16.04B	14.84B	14.48B	15.26B	13.91B
Stockholders Equity	-5.42B	-4.85B	-4.92B	-4.87B	-3.63B	-3.86B
Cash Flow
Free Cash Flow	1.32B	1.44B	1.49B	1.45B	1.59B	1.30B
Operating Cash Flow	1.47B	1.56B	1.63B	1.56B	1.75B	1.48B
Investing Cash Flow	-330.00M	-239.00M	-183.00M	-33.00M	-89.00M	-353.00M
Financing Cash Flow	-1.10B	-234.00M	-1.35B	-3.65B	58.00M	-844.00M

Otis Worldwide Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 89.78
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OTIS, the sentiment is Positive. The current price of 89.78 is above the 20-day moving average (MA) of 88.48, above the 50-day MA of 88.52, and below the 200-day MA of 91.57, indicating a neutral trend. The MACD of 0.44 indicates Negative momentum. The RSI at 56.35 is Neutral, neither overbought nor oversold. The STOCH value of 73.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OTIS.

Otis Worldwide Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PH	79 Outperform	$117.22B	33.42	27.30%	0.79%	0.22%	26.66%
EMR	76 Outperform	$81.66B	36.17	10.91%	1.58%	2.97%	18.14%
ITW	71 Outperform	$73.84B	24.92	91.71%	2.43%	-0.41%	-10.88%
ROK	71 Outperform	$46.56B	54.38	24.24%	1.33%	0.98%	-7.51%
IR	69 Neutral	$34.00B	63.67	5.35%	0.10%	4.20%	-34.47%
OTIS	67 Neutral	$34.88B	26.45	―	1.88%	0.73%	-15.57%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%