What can I say? United Technologies (NYSE: UTX) did it again.
The company with the unsexy industry categorization -- "diversified industrial conglomerate" -- once again turned in decidedly attractive earnings yesterday by pulling in robust earning margins.
Thanks to 50 basis points' worth of operating margin expansion in Q3, UTC's 10% earnings growth ($1.33 per share) beat analyst estimates. However, the only low point was that it pulled down less revenue growth than expected (7%). Nevertheless, the overall numbers were so good that, with just one quarter remaining in the fiscal year, management is now certain it will hit near the high end of previous guidance, earning somewhere between $4.90 and $4.95 per share this year.
None of this, of course, was unexpected. I think I made it quite clear in Tuesday's Foolish Forecast that I consider UTC an outstanding company, and a stock worth owning. So let's move right on from the expected to something a bit surprising.
The other UTC
Writing often on the defense sector as I do, I'm ordinarily inclined to view UTC as a defense company. Its Pratt & Whitney engines do, after all, feature prominently in the hindparts of many fighter jets -- Lockheed Martin's (NYSE: LMT) F-35 and Boeing's (NYSE: BA) F-15.
The most interesting information in yesterday's news, however, bears more on the prospects for civilian contractors the likes of Apogee Enterprises (Nasdaq: APOG) and American Reprographics (NYSE: ARP) -- firms whose fortunes are tied to the commercial construction market. We've all heard the rumors that commercial construction is going to be the next domino to get flushed down the toilet (to mix a metaphor) after residential construction. But judging from UTC's results, that's not necessarily so.
Q3 sales were up 5% in the Carrier HVAC business and 10% at Otis elevators, and both segments managed to grow their profits at least slightly. Looking forward, management advised that "double digit growth" in new orders from Asia is counterbalancing elevator orders that are only "flat" (i.e. not down) in the U.S. Meanwhile, "Carrier's Commercial HVAC new equipment orders were up double digits globally."
I don't know about you, but to me, that doesn't sound like much of a slowdown. Not gangbusters growth, certainly, but hardly the stuff of Halloween ghost tales, either.
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