United Technologies: The Bull Case Remains Intact

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WG Investment Research


  • United Technologies reported better-than-expected Q3 2018 operating results, and management again raised its full-year guidance.
  • UTX has a bull case that keeps getting stronger.
  • I am long UTX, and I plan to build my position in this industrial conglomerate.
  • This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Get started today »

United Technologies (NYSE:UTX) may not be in the news a lot, but this is definitely a company that has a lot going on. The industrial conglomerate is in the process of acquiring Rockwell Collins (COL) and, more recently, the company launched the final bidding process for the potential sale of its approximately $3B safety and security business.

While the company does not get much attention from the financial media, UTX shares have performed pretty much in line with the broader market so far in 2018.

ChartUTX data by YCharts

Looking ahead, however, I believe that UTX shares will likely outperform the market because it is well-positioned for 2019 and beyond. Additionally, the company's most recent operating results show that the bull case remains intact.

The Latest - A Beat And Raise, Again

United Tech. reported better-than-expected Q2 2018 revenue and earnings a few months ago, so the most recent quarter was just more of the same. On October 23, 2018, the company reported Q3 2018 results that beat the top- and bottom-line estimates. It reported adjusted Q3 2018 EPS of $1.93 (beat by $0.11) on revenue of $16.51B (beat by $360M), which also compares favorably to the year-ago quarter.

The company reported strong top-line growth across the board, with one of its largest operating segments, Pratt & Whitney, leading the charge with YoY growth of 24% (13% organically).

Pratt & Whitney also reported a 7% YoY increase in operating profit with benefits seen in the Commercial aftermarket and in Military engines. During the conference call, management was encouraged by the Q3 2018 results, but it also anticipates for the operating segment to finish the current year on a strong note. To this point, management now expects for the operating segment's profit to hit the high end of the previously communicated range of $25M-75M.

ChartUTX PE Ratio (TTM) data by YCharts

This article was written by

WG Investment Research profile picture
Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long UTX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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