Ah, back to one of my favorite subjects: the unloved -- or perhaps, at least, underloved -- industrial conglomerate. I've talked fairly recently about the likes of Parker-Hannifin
It was another fine quarterly performance for this maker of products ranging from air conditioners to elevators to jet engines. Revenue climbed more than 14%, with the company pegging organic growth at a nice 9% clip. Although Otis was a little sluggish on the revenue front (up less than 3%) and Hamilton Sundstrand had just a little more than 6% top-line growth, the other units all contributed double-digit revenue growth for the quarter. Profitability was also improved during the quarter, and the company saw operating income grow more than 18% and net income increase almost as much before including the impact of an accounting change.
While some accounting adjustments obfuscate the segment-by-segment comparisons, here's the gist of it all: The aerospace triumvirate (Sikorsky, Pratt & Whitney, and Hamilton) did well, with strong helicopter and large-engine sales offsetting a more sluggish performance in the Hamilton business. In the other businesses, there was strong reported growth in Fire & Security and Carrier segments and more moderate growth in Otis.
As for cash flow, the company increased it by more than 21% to exceed $3.4 billion. Not only is that a solid performance in its own right, but it'll also help continue to fund dividends, stock buybacks, and acquisitions. Couple that with expectations of further growth and margin improvement, and you have a company worth a serious look.
The only thing I consider a real drawback about United Technologies is that the price is just a bit beyond my margin-of-safety range. So while it would seem to be a very good company to hold on to, I'd like a bit more of a discount before plunking down new money.
For more industrial-strength Foolishness:
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
