United Technologies Corp (UTX) is a technology solutions provider for the building systems and aerospace industries. They have fire and security systems for buildings that they sell all over the world. They deal in both residential and commercial buildings. They also sell aftermarket parts to the aerospace industry.
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UTC’s P/E ratio is 14. That is around average for a Dow Jones stock. It is lower than the average S&P 500 stock of 16-17. And it is high for the aerospace industry. All that combined, it seems like this stock is overvalued.
Their sales seem flat over the past few years. In addition, their earnings are pretty stagnant as well. They have been getting better margins as of late, but not by a significant amount. It is fairly high for this industry at 12% compared to the 3% average. But again, I don’t know if this will be enough to grow their net income enough to warrant a 14 P/E.
In addition, with the cutting of federal budgets, I’m not sure if they will be able to continue their government contracts like they have been through the recession.
This is a $70 billion company. That means they are already going to have a hard time growing. It is also 84% institution owned. That means professional money managers are keeping an eye on this stock. If their cash flow doesn’t improve, I don’t know how they can keep this valuation level. They also have growing long term debt on top of all that.
You can keep track of the stock market on Finance World. It’s a website with a lot of information and resources for beginner investors.