United Technologies Corp. relies on international contracts

Investment idea by DTI

Exchange: NYSE

Sector: Industrial Goods

Industry: Aerospace Defense Products & Services

Entry strategy

Price: $128–132

Stop-loss: up to $121,5

Take profit: first target $138, then $162

Investment horizon until the end of 2018

Company details

United Technologies Corp. was founded in 1934 as a result of United Aircraft and Transport Corporation division into three separate companies. An american corporation provides services and produce commodities for construction systems and aerospace industry. It specializes in the following sectors: Otis, Pratt & Whitney, UTC Aerospace Systems, UTC Climate и Controls & Security.

United Technologies Corp. vigorously promotes its products in the global market. For instance, on 1 June 2018, it won US Defence Department contract accounted for $2,02 bln. In addition, on 17 June 2018, selected an auxiliary power unit produced by United Technologies Corp. subsidiary for their new aircrafts.

    We expect company’s financial performance and stock prices to improve due to

  • global aircraft manufacturing industry expansion,
  • further US economic prosperity,
  • military expenditures increase and US tax reform,
  • investment activity towards high-tech products,
  • new international projects.

Company financial performance

United Technologies Corp. revenue upturned from $56,33 in 2015 to $59,8 bln in 2017, while profits — from $4 bln to $4,55 bln (see Table 1 and Table 2).

Financial summary of United Technologies Corp. performance is presented in Table 1 and Table 2:

Table 1. Financial performance of United Technologies Corp. ($UTX). Source: MarketWatch — Open original image
Table 2. Financial performance of United Technologies Corp. ($UTX) for 2017 and Q1 of 2018. Source: MarketWatch — Open original image

United Technologies Corp. share price is lower than that of competitors. It is indicated by P/E multiplier value of 19,82, which is below an industry average of 27,04. Company value underestimation is also justified by P/BV and P/CF multiplier values.

The corporation is more financially sustainable than its competitors — the Quick Ratio is amounted to 0,96, while the Current Ratio equals 1,32. Return on assets (ROA) and investments (ROI) are higher than rates of competitors — five—year average values accounted for 6,09% and 8,36%, respectively. Similarly, return on equity (ROE) has steadily been higher than that of other industry members

During the last 5 years, profitability indicators have been above those of competitors. Asset Turnover) is stably higher than the industry average, probably, due to an effective expenditure management.

Payout Ratio and and the five—year average of Dividend Yield are 40,48% and 2,22%, respectively. These figures are twice as high as those of company’s competitors.

Technical analysis (trading plan)

Graph 1. Technical analysis of United Technologies Corp. ($UTX) stock. Source: Investing.com — Open original image

Also published on Medium.