Otis Worldwide to Report Q2 Earnings: Here's What Investors Must Know

Otis Worldwide Corporation OTIS is scheduled to report second-quarter 2025 results on July 23, before the opening bell.In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 1.1%, while the net sales missed the same by 1.7%. On a year-over-year basis, the bottom line grew 5% while the top line tumbled 3%.OTIS’ earnings surpassed the consensus mark in two of the trailing four quarters and missed on the remaining two occasions, with an average surprise of 0.2%.Trend in Otis Worldwide’s Estimate RevisionFor the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) has trended upward to $1.02 from $1.01 in the past 30 days. However, the estimated figure indicates a decline of 3.8% from the year-ago adjusted EPS of $1.06.Otis Worldwide Corporation Price and EPS Surprise Otis Worldwide Corporation price-eps-surprise | Otis Worldwide Corporation QuoteThe consensus mark for net sales is pegged at $3.68 billion, indicating 2.3% growth from the year-ago figure of $3.6 billion. (See the Zacks Earnings Calendar to stay ahead of market-making news.)Key Factors to Note for OTIS’ Q2 EarningsSalesThis leading elevator and escalator manufacturing, installation and service company’s second-quarter top line is likely to have gained year over year, driven by the increased contributions from the Service segment (which contributed 65.3% to first-quarter 2025 net sales). The Service segment is expected to have gained due to favorable market trends for maintenance and repair demand alongside modernization. The company’s focus on its modernization strategy has been boding well for its prospects and is likely to have added incremental value to its orders and backlog during the quarter, thus boosting the top line.OTIS’ focus on acquisitions, product innovations and the integration of new technologies, driven by ongoing research and development efforts, is likely to have aided its performance.However, weak performance in the New Equipment segment (which contributed 34.7% to first-quarter 2025 net sales) is likely to have restricted the top-line growth to some extent during the second quarter due to challenges in China and, to some extent, in the EMEA region (especially Europe).For the second quarter, our model predicts the Service segment’s net sales to increase year over year by 4.7% to $2.28 billion, with New Equipment segment’s net sales declining 5.2% to $1.35 billion.MarginsThe bottom line of OTIS is expected to have decreased in the second quarter due to the ongoing inflationary pressures, primarily higher labor and material costs, witnessed in its Service segment, accompanied by lower volume and unfavorable mix in its New Equipment segment. Although the persisting market headwinds are concerning for the margins, favorable pricing, productivity and commodity tailwinds, along with leverage from improved contributions from the Service segment, are likely to have eased the negative impacts of the headwinds during the quarter to some extent.We expect the adjusted operating margin in the New Equipment segment to decrease 220 basis points (bps) year over year to 5.5%, while the same for the Service segment is anticipated to inch up 10 bps to 24.8%.Moreover, the selling, general and administrative (SG&A) expenses in the quarter are likely to have increased due to annual wage increases and higher restructuring costs. For the to-be-reported quarter, our model expects SG&A expenses (as a percentage of net sales) to expand year over year by 50 bps to 13%.What the Zacks Model Unveils for OTISOur proven model conclusively predicts an earnings beat for Otis Worldwide this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.Earnings ESP: OTIS has an Earnings ESP of +0.39%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.Zacks Rank: Currently, the company carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.Other Stocks With the Favorable CombinationHere are some other stocks from the Zacks Industrial Products sector, which per our model, have the right combination of elements to deliver an earnings beat this time around.Greif, Inc. GEF has an Earnings ESP of +6.95% and a Zacks Rank of 1.The company’s earnings beat estimates in two of the last four quarters and missed on the other two occasions, the negative average surprise being 10.8%. Greif’s earnings for the third quarter of fiscal 2025 are expected to increase 35.9%.Stanley Black & Decker, Inc. SWK currently has an Earnings ESP of +18.80% and a Zacks Rank of 3.The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 18.4%. Stanley Black & Decker’s earnings for the second quarter of 2025 are expected to decline 65.1%.A. O. Smith Corporation AOS currently has an Earnings ESP of +4.48% and a Zacks Rank of 3.The company’s earnings beat estimates in one of the last four quarters, met on one occasion and missed on the other two occasions, the average surprise being 0.04%. A. O. Smith’s earnings for the second quarter of 2025 are expected to tumble 8.5%.One Big Gain, Every Trading DayTo help you take full advantage of this market, you’re invited to access every stock recommendation in all our private portfolios - for just $1.Zacks private portfolio services that closed 256 double and triple-digit winners in 2024 alone. That’s about one big gain every day the market was open. Of course, not all our picks are winners, but members have seen recent gains as high as +627% +1,340%, and +1,708%.Imagine how much you could profit with a steady stream of real-time picks from all our services that cover a number of strategies to suit a variety of investing and trading styles.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Stanley Black & Decker, Inc. (SWK): Free Stock Analysis Report A. O. Smith Corporation (AOS): Free Stock Analysis Report Greif, Inc. (GEF): Free Stock Analysis Report Otis Worldwide Corporation (OTIS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks