To borrow a phrase from Stephen Colbert: "They did it!"

On Wednesday, industrial conglomerate United Technologies (NYSE: UTX) put an exclamation point on the end of its fiscal 2007, closing out its third straight year of beating every single earnings hurdle that Wall Street set for it. What's more, management even beat its own expectations. Three months ago, UTC was predicting profits of $4.22 to $4.25 for this year, and a "challenging" fiscal 2008 ahead. But the company actually produced $4.27 per share in profits in 2007 and ...

And?
And furthermore backtracked on just how much of a challenge 2008 is going to pose. Back in October, UTC VP Greg Hayes warned us that a weak housing market and generally "slowing U.S. economy" were likely to hurt performance at the company's Carrier HVAC and Otis elevator divisions this year. But CEO George David struck a much more optimistic tone in yesterday's report. While acknowledging that "the U.S. economic outlook is mixed" (emphasis added), David argued that "UTC's balance across geographic ... markets should sustain yet another year of double digit earnings-per-share growth" (emphasis added again).

In other words, David is saying that the world is bigger than the U.S. The fact that UTC generates half of its revenues and profits outside our borders should blunt the effects of any slowdown here at home on UTC's profitability. In fact, considering how a "significant deterioration in its North American Residential market" failed to prevent UTC's global business from exceeding its goals in 2007, David felt confident predicting double-digit profits growth ($4.65 to $4.85 per share) in 2008 -- echoing last week's comments from similarly diversified industrial titan GE (NYSE: GE).

Caveat investor
Sounds pretty good, huh? Many investors thought so, and their buying sent the stock up more than 5% yesterday. But I'd caution investors to think carefully before buying into this latest story. Remember that just three months ago, David and his lieutenants evinced a more cautious tone on their prospects. Apparently, visions of the future can change in a hurry, and what looked bleak in October, and then brightened in January, could easily cloud over again in April.

That's particularly worrisome in light of the stock's valuation. The company generated $4.2 billion in free cash flow last year; trading now for 17 times that number, UTC looks awfully pricey for a company that most analysts expect to grow at just 12% per year over the next half decade. While I'm all in favor of paying up for quality, superior margins, and geographical diversification, prudent investors might want to wait till Friday to see whether GE and UTC peers Caterpillar (NYSE: CAT) and Honeywell (NYSE: HON) agree that things are looking up.

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