United Tech. (Utx) Full Valuation Analysis

Topics: Financial ratio, Dividend yield, Revenue / Pages: 21 (5016 words) / Published: Nov 3rd, 2011
Industry Classification United Technologies Corporation (UTX) has 5 different major segments. These five segments can be broken down into three major industries. Pratt & Whitney, Hamilton Sundstrand, and Sikorsky Helicopters can be classified as Aerospace/Defense (AEROD). Carrier can be grouped in the Heating & Air Conditioning Equipment Manufacturing Industry (HVAC). The Otis segment belongs to the Elevator, Millwright & Machine Rigging Contractors Industry. The company as a whole can be classified as a conglomerate; however, analyzing the Conglomerate Industry as a whole would not be beneficial for valuation. United Technologies as a company is 42% Aerospace/Defense products, therefore that industry will represent a majority of the report. UTX as a whole displays cyclical behavior. 1. Aerospace/Defense The Aerospace/Defense Industry is in the decline stage of their life cycle. There are several contributing factors for this assumption. Industry value added for aerospace/defense has been on the decline for the past several years. Additionally, military spending is expected to decline in the following years as well. Product development has also slowed in recent years. A majority of new products are upgrades from older products. Companies in this industry have also been shifting production to countries outside the U.S. for cheaper manufacturing costs. Cost competition is causing smaller firms to be forced out of the industry and contributing to the overall decline of the industry. Aerospace/Defense displays a defensive behavior. However, at a time of war the industry is independent of gross economic behavior.

2. Heating & Air Conditioning Equipment Manufacturing (HVAC) HVAC as an industry is in the growth stage of their life cycle. Although the products within the industry are not new, they are now viewed as necessities of construction. Improving technology and global manufacturing is making the industry more technical in nature

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