United Technologies Corp Stock Buy Recommendation Reiterated (UTX)

NEW YORK (TheStreet) -- United Technologies (NYSE:UTX) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:

• UNITED TECHNOLOGIES CORP has improved earnings per share by 23.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITED TECHNOLOGIES CORP increased its bottom line by earning $5.45 versus $4.74 in the prior year. This year, the market expects an improvement in earnings ($5.50 versus $5.45).
• The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.82 is somewhat weak and could be cause for future problems.
• The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Aerospace & Defense industry and the overall market on the basis of return on equity, UNITED TECHNOLOGIES CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
• UTX, with its decline in revenue, slightly underperformed the industry average of 5.1%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
• The gross profit margin for UNITED TECHNOLOGIES CORP is currently lower than what is desirable, coming in at 31.10%. Regardless of UTX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.70% trails the industry average.

United Technologies Corporation provides technology products and services to the building systems and aerospace industries worldwide. The company has a P/E ratio of 12.8, equal to the average conglomerates industry P/E ratioand below the S&P 500 P/E ratio of 17.7. United has a market cap of $67.1 billion and is part of the conglomerates sector and conglomerates industry. Shares are up 1.5% year to date as of the close of trading on Wednesday.

You can view the full United Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

 

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