Why Is Otis Worldwide (OTIS) Up 4.9% Since Last Earnings Report?

A month has gone by since the last earnings report for Otis Worldwide (OTIS). Shares have added about 4.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Otis Worldwide due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Otis Worldwide Q4 Earnings Meet Estimates, Sales Miss

Otis reported mixed fourth-quarter 2025 results, wherein earnings came in line with the Zacks Consensus Estimate, but net sales missed the same. Meanwhile, on a year-over-year basis, both the top and bottom lines increased.

Otis Worldwide’s fourth-quarter 2025 results were supported by year-over-year growth, driven primarily by Service sales, with gains across all lines of business. This performance was partially offset by lower new equipment sales in China and the Americas. Service segment growth was fueled by strong momentum in organic maintenance and repair, along with a significant increase in organic modernization sales.

Overall performance highlights the continued success of OTIS’ Service-led strategy. Despite New Equipment headwinds in key regions, a robust increase in modernization orders and an expanding total backlog reinforced operational momentum. Supported by this strength, the company has outlined a confident 2026 outlook, projecting adjusted EPS growth in the mid- to high-single-digit range.

Inside OTIS’ Q4 Headlines

The company reported adjusted earnings of $1.03 per share, in line with the Zacks Consensus Estimate. The reported figure increased 10.8% from the year-ago quarter’s EPS of 93 cents.

Net sales of $3.8 billion missed the consensus mark of $3.9 billion by 2.7% but increased 3.3% on a year-over-year basis. Organically, net sales were up 1% year over year. Favorable foreign exchange movement supported sales growth by 2%.

Adjusted operating margin expanded 70 basis points year over year to 16.6%, reflecting a favorable segment mix and improved performance across key segments.

Segment Details of OTIS

Service: The net sales of this segment increased 8% year over year to $2.5 billion. A 5% rise in organic sales was accompanied by a 3% favorable foreign exchange movement. Organic maintenance and repair sales increased 4% and organic modernization sales rose 9% from the year-ago quarter. The Modernization backlog at constant currency increased 30% year over year.

Segment operating margin expanded 100 bps year over year to 25.5%, driven by higher volume, favorable pricing and productivity, and gains on sales of assets, partially offset by inflationary pressures including higher labor costs and mix.

New Equipment: This segment’s net sales of $1.29 billion fell 5% from the prior-year period. Organic sales declined 6%. New Equipment orders were down 2% at a constant currency basis for the quarter, as mid-single-digit growth in EMEA and the Americas was more than offset by a high-teens decline in Asia Pacific due to a tough comparison along with a mid-single-digit decline in China. The segment’s backlog increased 6% at actual currency and 2% at constant currency.

Segment operating margin contracted 110 bps year over year to 3.6%. The downtrend was due to impacts of lower volume, unfavorable price, tariff headwinds and mix, which was partially offset by productivity tailwinds and other restructuring actions.

Financial Position of OTIS

Otis Worldwide had cash and cash equivalents of $1.1 billion as of Dec. 31, 2025, down from $2.3 billion reported at 2024-end. Long-term debt decreased to $6.9 billion as of the end of 2025 from $6.97 billion at 2024-end.

Net cash flows provided by operating activities were $1.59 billion as of 2025, up from $1.56 billion a year ago. Adjusted free cash flow (FCF) totaled $1.58 billion at the end of 2025, up from $1.57 billion a year ago.

OTIS’ 2025 Highlights

Net sales for 2025 came in at $14.4 billion compared with $14.3 billion reported in 2024. Adjusted operating profit in 2025 came in at $2.4 billion compared with $2.3 billion reported in 2024. In 2025, adjusted EPS came in at $4.05 compared with $3.83 reported in the previous year.

OTIS Unveils 2026 Guidance

The company is expecting net sales to be between $15 billion and $15.3 billion. The projection indicates approximately 4.2%-6.3% year-over-year growth. Organic sales growth is projected in the low- to mid-single-digit range. Organic New Equipment sales are expected to be flat to down low single digits, while Organic Service sales are anticipated to grow in the mid- to high-single-digit range. Adjusted operating profit is anticipated to be between $2.5 billion and $2.6 billion, now reflecting an increase of $60-$100 million at constant currency, and an increase of $100-$140 million at actual currency. Adjusted EPS is expected to increase in the mid- to high-single-digit range. Adjusted FCF is expected to be between $1.6 billion and $1.7 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Otis Worldwide has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Otis Worldwide has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Otis Worldwide belongs to the Zacks Manufacturing - General Industrial industry. Another stock from the same industry, Graco Inc. (GGG), has gained 6.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.

Graco reported revenues of $593.2 million in the last reported quarter, representing a year-over-year change of +8.1%. EPS of $0.77 for the same period compares with $0.64 a year ago.

Graco is expected to post earnings of $0.75 per share for the current quarter, representing a year-over-year change of +7.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.5%.

Graco has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.

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This article originally published on Zacks Investment Research (zacks.com).

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