For 10 straight quarters, United Technologies (NYSE:UTX) has done nothing but beat the pants off Wall Street's earnings estimates. But will UTC keep the streak alive when it reports third-quarter earnings Wednesday morning?

What analysts say:

  • Buy, sell, or waffle? Nineteen analysts cover United Technologies -- 18 rate it a buy, while one says to hold.
  • Revenue. On average, Wall Street is looking for 11% revenue growth to $13.6 billion.
  • Earnings. Profits are predicted to rise 17% to $1.16 per share.

What management says:
It's starting to sound like even CEO George David is getting bored with UTC's consistent thrashing of the Street's estimates. Reviewing the Q2 results back in July, he characterized them as showing "yet another strong quarter for UTC." Yawn.

Don't expect UTC to shake things up (or upset the apple cart) any time soon. Management cited "solid markets worldwide in commercial aviation and commercial construction coupled with the successes of a wide range of new UTC products" as contributing to its success, and sees "these conditions continuing over the balance of the year and into 2008."

What management does:
Why, even margins are starting to look up. The firm's gross margin started to bounce back last quarter, pulling its operating margin up in tandem. Net margin is continuing to slide, however.

Margins

3/06

6/06

9/06

12/06

3/07

6/07

Gross

27.8%

27.5%

27.7%

27.7%

26.9%

27.0%

Operating

12.5%

12.3%

12.7%

13.2%

12.7%

13.0%

Net

7.3%

7.4%

7.6%

7.8%

7.7%

7.5%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
According to David, the only speck of grey cloud amidst the silver-lined results is UTC's North American Residential HVAC business. Installations of A/C units in new houses simply isn't going to be much of a growth driver until homebuilders like Centex (NYSE:CTX), Lennar (NYSE:LEN), and Toll Brothers (NYSE:TOL) figure out a way to start selling more houses. Still, UTC observes that "strength in commercial markets worldwide and residential markets internationally drove a solid double digit increase in Carrier's operating income in the quarter." This backs up what we saw last month at window-maker Apogee (NASDAQ:APOG) -- namely, "strong project flow" in architectural glass that gets installed in commercial buildings. This market, at least, appears to still have wind at its back.

Meanwhile, as we discussed earlier this month, and as UTC quickly moved to prove, its aerospace division has been preparing for turbulence in defense spending by shifting its focus more toward commercial markets. This could position UTC favorably relative to more defense-focused rivals like Lockheed Martin (NYSE:LMT) and General Dynamics (NYSE:GD). Now, I still don't see UTC's shares as any great bargain, but in light of all of the above, I do understand why management might be inclined to take a few off the table.

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.