Yahoo Finance Otis Worldwide Corporation (OTIS) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Otis Worldwide (OTIS)? Shares have been on the move with the stock up 2% over the past month. The stock hit a new 52-week high of $87.47 in the previous session. Otis Worldwide has gained 11.3% since the start of the year compared to the 20.8% move for the Zacks Construction sector and the 20.8% return for the Zacks Building Products - Miscellaneous industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 26, 2023, Otis Worldwide reported EPS of $0.8 versus consensus estimate of $0.74.
For the current fiscal year, Otis Worldwide is expected to post earnings of $3.45 per share on $14.08 billion in revenues. This represents an 8.83% change in EPS on a 2.86% change in revenues. For the next fiscal year, the company is expected to earn $3.76 per share on $14.67 billion in revenues. This represents a year-over-year change of 9.08% and 4.23%, respectively.
Valuation Metrics
Otis Worldwide may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Otis Worldwide has a Value Score of C. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 25.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 16.7X. On a trailing cash flow basis, the stock currently trades at 23.6X versus its peer group's average of 10.2X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Otis Worldwide currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Otis Worldwide passes the test. Thus, it seems as though Otis Worldwide shares could have a bit more room to run in the near term.
How Does OTIS Stack Up to the Competition?
Shares of OTIS have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is PGT, Inc. (PGTI). PGTI has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of C, and a Momentum Score of A.
Earnings were strong last quarter. PGT, Inc. beat our consensus estimate by 27.27%, and for the current fiscal year, PGTI is expected to post earnings of $1.95 per share on revenue of $1.49 billion.
Shares of PGT, Inc. have gained 8.6% over the past month, and currently trade at a forward P/E of 14.55X and a P/CF of 9.58X.
The Building Products - Miscellaneous industry is in the top 22% of all the industries we have in our universe, so it looks like there are some nice tailwinds for OTIS and PGTI, even beyond their own solid fundamental situation.
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Otis Worldwide Corporation (OTIS) : Free Stock Analysis Report
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