Business. United Technologies is a globally operated, manufacturing-conglomerate company that sells commercial products (refrigeration, elevators, safety systems) and aerospace equipment (jet engines, helicopters, aircraft systems) to governments, manufacturers, and businesses.
Business plan. Profits are earned from contract sales of high-end machinery and aftermarket services. The business is primarily capitalized by debt which is backed by a large store of equity.
Market postion. United Technologies has large market-shares of the elevator, air conditioning, helicopter, and jet engine industries. Its competitive advantages are the high barriers to entry (e.g., jet engine manufacturing, high-rise elevator manufacturing) by new competitors and the strong brand names of subsidiary businesses (Otis, Carrier, Pratt & Whitney, Sikorsky, Hamilton Sundstrand).
Competitive advantage. Pratt & Whitney’s competitors are Rolls Royce and General Electric, both of which compete on the basis of improved performance in fuel efficiency and noise reduction. Carrier’s competitors are Johnson Controls, Trane, and Lennox. Otis’s competitors are Kone corp, Schindler Holding Inc, ThyssenKrup AG, and 1,000 smaller companies.
Investment potential. The stock (UTX: nyse) has a large market capitalization value and its institutional ownership is 82%. Standard & Poor’s credit rating is A. The dividend yield is about 2.5% and I estimate a potential annual return of 11%.
Risk management. Profits could fall as a result of global economic downturns, loss of government contracts, interruption of the supply chain, and product malfunction.
