Will Otis (OTIS) be Able to Deliver Higher Q4 Earnings?

Otis Worldwide Corporation OTIS is scheduled to report fourth-quarter 2021 results on Jan 31, before the opening bell.

In the last reported quarter, the company’s earnings and net sales beat the Zacks Consensus Estimate by 5.5% and 1.8%, respectively. On a year-over-year basis, earnings and net sales grew 11.6% and 10.8%, respectively.

Otis’ earnings topped the consensus mark in all the last seven quarters.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained stable at 68 cents over the past 60 days. The estimated figure indicates 3% growth from the year-ago level. The consensus mark for net sales is pegged at $3.58 billion, suggesting a 2.6% increase from the year-ago reported figure of $3.49 billion.

Otis Worldwide Corporation Price and EPS Surprise

Otis Worldwide Corporation price-eps-surprise | Otis Worldwide Corporation Quote

Key Factors to Note

The world's leading elevator and escalator manufacturing, installation, and service company is expected to have registered slightly higher year-over-year sales and earnings in the fourth quarter, given favorable service pricing as well as productivity initiatives in both New Equipment and Service segments.

Increased organic sales, margin expansion across the segments, a strong business strategy, and robust data and technology-based innovations are expected to benefit its quarterly results. Otis has been focusing on improving the business on the back of various strategies like acquisitions, product innovations, and new technologies through continuous research and development.

New Equipment (accounting for 42% of total revenues) is expected to have been strong in the fourth quarter. The Zacks Consensus Estimate for New Equipment revenues is pegged at $1,554 million, which indicates an increase of 1.5% from $1,531 million in the year-ago period.

For Service (accounting for 58% of the company’s total revenues), revenues are expected to have increased in the quarter to be reported. The Zacks Consensus Estimate for Service revenues is pegged at $2,056 million, which indicates an increase of 4.8% from $1,962 million in the year-ago period.

Yet, headwinds like commodity inflation and the absence of temporary cost actions are likely to have put pressure on the bottom line. The consensus mark for adjusted operating profit for the New Equipment unit indicates a fall of 8.9%, while that of Service suggests 6.1% year-over-year growth.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Otis this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Otis carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Some Stocks With Favorable Combination

Here are some other companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Boise Cascade Company BCC has an Earnings ESP of +9.09% and a Zacks Rank #1.

BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 45.5%.

Louisiana-Pacific Corporation LPX has an Earnings ESP of +1.08% and a Zacks Rank #1.

LPX’s earnings topped the consensus mark in all the last four quarters, with the average being 10.5%.

PulteGroup, Inc. PHM has an Earnings ESP of +1.88% and a Zacks Rank #2.

In the trailing four quarters, PHM’s earnings topped the consensus mark thrice but missed the same on one occasion, with the average surprise being 3.8%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Infrastructure Stock Boom to Sweep America

A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.

The only question is “Will you get into the right stocks early when their growth potential is greatest?”

Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.