Back in late October I noted the company's interestingly balanced outlook chart...
...and observed fundamentally that '...the 4%+ free cash flow yield is pleasant and most this comes back to investors via the dividend/buyback and a prospective c. x11 EV/ebit rating is not huge. Am I however really excited? Back at that US$100 level maybe but otherwise I am staying on the sidelines'.
Since then the shares have generally just pushed up...until today:
Fundamentally what caught the eye was the fall in commercial aftermarket sales at the aircraft engine company Pratt & Whitney...
...but generally the numbers read well with EPS up 10% assisted by 'all segments growing organically and the segment operating margin up 90 bps to 16.6%'.
The challenges come however with the 2015 outlook and this is via an exogenous factor (which has been a recent theme we have discussed at length here at Financial Orbit): the strong US dollar:
It is interesting how this has impacted 2015 earnings. Despite some benefits from buybacks the net impact has been to pull hopes back by a couple of percent. United Technologies will still grow EPS year-on-year on an estimated basis (c. +3%)
Let's go back to where I started. We are still going to have to see a lower United Technologies share price to make the stock really interesting (first re-look sub US$110 but nearer US$100 even more interesting). But the big headline is surely the impact of the higher US dollar. More generally I fear that this chart is surely going to show further compression...and that's not good for the broader markets.