Stock of the Day

April 1, 2021

Otis Worldwide (OTIS)

$98.44
-$0.59 (-0.6%)
Market Cap: $39.27B

About Otis Worldwide

Otis Worldwide Corporation engages in manufacturing, installation, and servicing of 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. This segment serves real-estate and building developers, and general contractors. It sells its products directly to customers, as well as through agents and distributors. The Service segment performs maintenance and repair services, as well as modernization services to upgrade elevators and escalators. Otis Worldwide Corporation was founded in 1853 and is headquartered in Farmington, Connecticut.

Otis Worldwide Bull Case

Here are some ways that investors could benefit from investing in Otis Worldwide Co.:

  • Otis Worldwide Co. recently announced a share repurchase plan authorizing the buyback of $2.00 billion in outstanding shares, indicating that the board believes the stock is undervalued. This can enhance shareholder value by reducing the number of shares outstanding, potentially increasing earnings per share.
  • The company reported a quarterly earnings per share (EPS) of $0.93, which, while slightly below analysts' expectations, reflects a stable earnings performance in a competitive market. Analysts anticipate an EPS of 4.03 for the current year, suggesting growth potential.
  • Otis Worldwide Co. has a strong market capitalization of $38.31 billion, which indicates a solid position in the industry and the ability to invest in growth opportunities.
  • The current stock price is $96.61, which may present a buying opportunity for investors looking to enter at a lower price point compared to historical highs.
  • The company has a consistent dividend payout, with a recent quarterly dividend of $0.39, translating to an annual yield of 1.58%. This can provide a steady income stream for investors.

Otis Worldwide Bear Case

Investors should be bearish about investing in Otis Worldwide Co. for these reasons:

  • Otis Worldwide Co. has a negative return on equity of 31.76%, which may indicate inefficiencies in generating profits from shareholders' equity, raising concerns about management effectiveness.
  • The company missed analysts' consensus estimates for EPS by $0.02, which could signal potential challenges in meeting future earnings expectations and may affect investor confidence.
  • Several analysts have issued "underweight" or "neutral" ratings on the stock, suggesting a lack of strong bullish sentiment in the market, which could limit price appreciation.
  • The net margin of 11.53% indicates that while the company is profitable, there may be room for improvement in cost management and operational efficiency.
  • With 88.03% of the company's stock owned by hedge funds and institutional investors, retail investors may have less influence on stock price movements, which can lead to volatility based on institutional trading decisions.

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