Why United Technologies (UTX) Is Falling Today

NEW YORK (TheStreet) -- United Technologies (UTX) was falling 2.3% to $113.15 after issuing downside guidance for first quarter earnings that falls below analyst estimates.

The company said it expects earnings of $1.25 a share in the first quarter. That's 13 cents below the $1.38 a share expected by analysts surveyed by Thomson Reuters.

United Technologies also updated its guidance for full-year 2014, saying it now expects earnings of between $6.55 and $6.85 a share. Analysts expect earnings of $6.82 for the year.

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TheStreet Ratings team rates UNITED TECHNOLOGIES CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate UNITED TECHNOLOGIES CORP (UTX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 51.92% and other important driving factors, this stock has surged by 29.30% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, UTX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • UNITED TECHNOLOGIES CORP reported significant earnings per share improvement 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 $6.22 versus $5.35 in the prior year. This year, the market expects an improvement in earnings ($6.82 versus $6.22).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 1.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $2,589.00 million or 31.22% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 4.16%.
  • The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
  • You can view the full analysis from the report here: UTX Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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