Intrinsic value of United Technologies - UTX

Previous Close

$126.70

  Intrinsic Value

$194.86

stock screener

  Rating & Target

str. buy

+54%

Previous close

$126.70

 
Intrinsic value

$194.86

 
Up/down potential

+54%

 
Rating

str. buy

We calculate the intrinsic value of UTX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.04
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
  4.98
  4.98
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  5.00
Revenue, $m
  57,244
  60,049
  62,997
  66,096
  69,353
  72,775
  76,371
  80,149
  84,118
  88,287
  92,668
  97,269
  102,102
  107,178
  112,510
  118,109
  123,990
  130,167
  136,654
  143,466
  150,620
  158,132
  166,022
  174,306
  183,006
  192,142
  201,735
  211,809
  222,387
  233,495
  245,159
Variable operating expenses, $m
 
  13,739
  14,280
  14,850
  15,448
  16,077
  16,738
  17,432
  18,161
  18,927
  19,732
  17,871
  18,759
  19,692
  20,671
  21,700
  22,781
  23,916
  25,107
  26,359
  27,673
  29,054
  30,503
  32,025
  33,624
  35,302
  37,065
  38,916
  40,859
  42,900
  45,043
Fixed operating expenses, $m
 
  37,649
  38,591
  39,555
  40,544
  41,558
  42,597
  43,662
  44,753
  45,872
  47,019
  48,194
  49,399
  50,634
  51,900
  53,197
  54,527
  55,891
  57,288
  58,720
  60,188
  61,693
  63,235
  64,816
  66,436
  68,097
  69,800
  71,545
  73,333
  75,167
  77,046
Total operating expenses, $m
  49,072
  51,388
  52,871
  54,405
  55,992
  57,635
  59,335
  61,094
  62,914
  64,799
  66,751
  66,065
  68,158
  70,326
  72,571
  74,897
  77,308
  79,807
  82,395
  85,079
  87,861
  90,747
  93,738
  96,841
  100,060
  103,399
  106,865
  110,461
  114,192
  118,067
  122,089
Operating income, $m
  8,172
  8,661
  10,126
  11,691
  13,361
  15,140
  17,037
  19,055
  21,204
  23,488
  25,917
  31,203
  33,943
  36,852
  39,938
  43,212
  46,682
  50,361
  54,258
  58,387
  62,758
  67,386
  72,283
  77,465
  82,946
  88,742
  94,871
  101,349
  108,195
  115,428
  123,070
EBITDA, $m
  10,134
  12,345
  13,858
  15,474
  17,196
  19,032
  20,986
  23,067
  25,280
  27,632
  30,132
  32,788
  35,606
  38,598
  41,771
  45,135
  48,702
  52,481
  56,484
  60,723
  65,211
  69,962
  74,988
  80,304
  85,927
  91,872
  98,157
  104,799
  111,817
  119,231
  127,063
Interest expense (income), $m
  1,157
  1,128
  1,283
  1,444
  1,613
  1,790
  1,977
  2,173
  2,378
  2,595
  2,822
  3,060
  3,311
  3,574
  3,851
  4,141
  4,446
  4,767
  5,103
  5,457
  5,828
  6,217
  6,627
  7,056
  7,508
  7,982
  8,479
  9,002
  9,551
  10,127
  10,732
Earnings before tax, $m
  7,133
  7,533
  8,843
  10,247
  11,748
  13,350
  15,060
  16,883
  18,825
  20,894
  23,095
  28,143
  30,632
  33,278
  36,087
  39,070
  42,236
  45,594
  49,155
  52,930
  56,931
  61,168
  65,657
  70,409
  75,438
  80,761
  86,391
  92,347
  98,644
  105,301
  112,338
Tax expense, $m
  1,697
  2,034
  2,388
  2,767
  3,172
  3,605
  4,066
  4,558
  5,083
  5,641
  6,236
  7,599
  8,271
  8,985
  9,744
  10,549
  11,404
  12,310
  13,272
  14,291
  15,371
  16,515
  17,727
  19,010
  20,368
  21,805
  23,326
  24,934
  26,634
  28,431
  30,331
Net income, $m
  5,055
  5,499
  6,455
  7,480
  8,576
  9,746
  10,994
  12,324
  13,742
  15,252
  16,860
  20,544
  22,362
  24,293
  26,344
  28,521
  30,832
  33,284
  35,883
  38,639
  41,559
  44,653
  47,929
  51,398
  55,070
  58,955
  63,066
  67,413
  72,010
  76,870
  82,006

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  7,157
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  89,706
  86,651
  90,905
  95,377
  100,076
  105,014
  110,203
  115,655
  121,382
  127,399
  133,720
  140,359
  147,333
  154,658
  162,351
  170,432
  178,918
  187,831
  197,191
  207,021
  217,344
  228,185
  239,569
  251,524
  264,078
  277,261
  291,104
  305,641
  320,905
  336,933
  353,764
Adjusted assets (=assets-cash), $m
  82,549
  86,651
  90,905
  95,377
  100,076
  105,014
  110,203
  115,655
  121,382
  127,399
  133,720
  140,359
  147,333
  154,658
  162,351
  170,432
  178,918
  187,831
  197,191
  207,021
  217,344
  228,185
  239,569
  251,524
  264,078
  277,261
  291,104
  305,641
  320,905
  336,933
  353,764
Revenue / Adjusted assets
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
Average production assets, $m
  24,589
  25,821
  27,089
  28,421
  29,822
  31,293
  32,839
  34,464
  36,171
  37,964
  39,847
  41,826
  43,904
  46,086
  48,379
  50,787
  53,316
  55,972
  58,761
  61,690
  64,766
  67,997
  71,389
  74,952
  78,693
  82,621
  86,746
  91,078
  95,626
  100,403
  105,418
Working capital, $m
  6,644
  1,801
  1,890
  1,983
  2,081
  2,183
  2,291
  2,404
  2,524
  2,649
  2,780
  2,918
  3,063
  3,215
  3,375
  3,543
  3,720
  3,905
  4,100
  4,304
  4,519
  4,744
  4,981
  5,229
  5,490
  5,764
  6,052
  6,354
  6,672
  7,005
  7,355
Total debt, $m
  23,901
  24,682
  27,771
  31,018
  34,429
  38,014
  41,781
  45,739
  49,897
  54,266
  58,854
  63,675
  68,738
  74,056
  79,641
  85,508
  91,669
  98,139
  104,935
  112,071
  119,566
  127,436
  135,701
  144,381
  153,495
  163,066
  173,116
  183,669
  194,751
  206,388
  218,607
Total liabilities, $m
  62,127
  62,908
  65,997
  69,244
  72,655
  76,240
  80,007
  83,965
  88,123
  92,492
  97,080
  101,901
  106,964
  112,282
  117,867
  123,734
  129,895
  136,365
  143,161
  150,297
  157,792
  165,662
  173,927
  182,607
  191,721
  201,292
  211,342
  221,895
  232,977
  244,614
  256,833
Total equity, $m
  27,579
  23,742
  24,908
  26,133
  27,421
  28,774
  30,196
  31,689
  33,259
  34,907
  36,639
  38,458
  40,369
  42,376
  44,484
  46,698
  49,024
  51,466
  54,030
  56,724
  59,552
  62,523
  65,642
  68,918
  72,357
  75,970
  79,763
  83,746
  87,928
  92,320
  96,931
Total liabilities and equity, $m
  89,706
  86,650
  90,905
  95,377
  100,076
  105,014
  110,203
  115,654
  121,382
  127,399
  133,719
  140,359
  147,333
  154,658
  162,351
  170,432
  178,919
  187,831
  197,191
  207,021
  217,344
  228,185
  239,569
  251,525
  264,078
  277,262
  291,105
  305,641
  320,905
  336,934
  353,764
Debt-to-equity ratio
  0.867
  1.040
  1.110
  1.190
  1.260
  1.320
  1.380
  1.440
  1.500
  1.550
  1.610
  1.660
  1.700
  1.750
  1.790
  1.830
  1.870
  1.910
  1.940
  1.980
  2.010
  2.040
  2.070
  2.090
  2.120
  2.150
  2.170
  2.190
  2.210
  2.240
  2.260
Adjusted equity ratio
  0.255
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,055
  5,499
  6,455
  7,480
  8,576
  9,746
  10,994
  12,324
  13,742
  15,252
  16,860
  20,544
  22,362
  24,293
  26,344
  28,521
  30,832
  33,284
  35,883
  38,639
  41,559
  44,653
  47,929
  51,398
  55,070
  58,955
  63,066
  67,413
  72,010
  76,870
  82,006
Depreciation, amort., depletion, $m
  1,962
  3,684
  3,732
  3,782
  3,836
  3,891
  3,950
  4,011
  4,076
  4,144
  4,215
  1,584
  1,663
  1,746
  1,833
  1,924
  2,020
  2,120
  2,226
  2,337
  2,453
  2,576
  2,704
  2,839
  2,981
  3,130
  3,286
  3,450
  3,622
  3,803
  3,993
Funds from operations, $m
  2,344
  9,183
  10,187
  11,263
  12,411
  13,637
  14,943
  16,336
  17,818
  19,396
  21,075
  22,129
  24,025
  26,038
  28,176
  30,445
  32,852
  35,404
  38,109
  40,976
  44,013
  47,229
  50,634
  54,237
  58,051
  62,085
  66,351
  70,863
  75,632
  80,673
  86,000
Change in working capital, $m
  -1,536
  84
  88
  93
  98
  103
  108
  113
  119
  125
  131
  138
  145
  152
  160
  168
  176
  185
  195
  204
  215
  225
  237
  249
  261
  274
  288
  302
  317
  333
  350
Cash from operations, $m
  3,880
  9,099
  10,099
  11,170
  12,314
  13,534
  14,836
  16,222
  17,699
  19,271
  20,943
  21,991
  23,880
  25,886
  28,016
  30,277
  32,675
  35,218
  37,914
  40,771
  43,798
  47,003
  50,397
  53,989
  57,790
  61,811
  66,064
  70,561
  75,315
  80,340
  85,650
Maintenance CAPEX, $m
  0
  -931
  -978
  -1,026
  -1,077
  -1,130
  -1,185
  -1,244
  -1,305
  -1,370
  -1,438
  -1,509
  -1,584
  -1,663
  -1,746
  -1,833
  -1,924
  -2,020
  -2,120
  -2,226
  -2,337
  -2,453
  -2,576
  -2,704
  -2,839
  -2,981
  -3,130
  -3,286
  -3,450
  -3,622
  -3,803
New CAPEX, $m
  -2,087
  -1,233
  -1,268
  -1,333
  -1,400
  -1,472
  -1,546
  -1,625
  -1,707
  -1,793
  -1,883
  -1,978
  -2,078
  -2,183
  -2,293
  -2,408
  -2,529
  -2,656
  -2,789
  -2,929
  -3,076
  -3,230
  -3,392
  -3,562
  -3,741
  -3,928
  -4,125
  -4,332
  -4,549
  -4,776
  -5,015
Cash from investing activities, $m
  -2,503
  -2,164
  -2,246
  -2,359
  -2,477
  -2,602
  -2,731
  -2,869
  -3,012
  -3,163
  -3,321
  -3,487
  -3,662
  -3,846
  -4,039
  -4,241
  -4,453
  -4,676
  -4,909
  -5,155
  -5,413
  -5,683
  -5,968
  -6,266
  -6,580
  -6,909
  -7,255
  -7,618
  -7,999
  -8,398
  -8,818
Free cash flow, $m
  1,377
  6,935
  7,853
  8,811
  9,837
  10,933
  12,104
  13,354
  14,687
  16,108
  17,622
  18,503
  20,217
  22,040
  23,978
  26,037
  28,223
  30,543
  33,005
  35,616
  38,385
  41,320
  44,429
  47,722
  51,210
  54,902
  58,809
  62,943
  67,316
  71,941
  76,831
Issuance/(repayment) of debt, $m
  3,686
  2,985
  3,089
  3,246
  3,412
  3,585
  3,767
  3,958
  4,158
  4,368
  4,589
  4,820
  5,063
  5,318
  5,586
  5,866
  6,161
  6,471
  6,796
  7,137
  7,495
  7,870
  8,265
  8,679
  9,114
  9,571
  10,050
  10,553
  11,082
  11,637
  12,219
Issuance/(repurchase) of shares, $m
  -2,241
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  881
  2,985
  3,089
  3,246
  3,412
  3,585
  3,767
  3,958
  4,158
  4,368
  4,589
  4,820
  5,063
  5,318
  5,586
  5,866
  6,161
  6,471
  6,796
  7,137
  7,495
  7,870
  8,265
  8,679
  9,114
  9,571
  10,050
  10,553
  11,082
  11,637
  12,219
Total cash flow (excl. dividends), $m
  2,138
  9,920
  10,942
  12,058
  13,248
  14,518
  15,871
  17,312
  18,845
  20,476
  22,211
  23,323
  25,280
  27,358
  29,564
  31,903
  34,384
  37,014
  39,801
  42,753
  45,880
  49,190
  52,694
  56,401
  60,324
  64,472
  68,859
  73,497
  78,398
  83,578
  89,050
Retained Cash Flow (-), $m
  -221
  -1,116
  -1,166
  -1,225
  -1,288
  -1,353
  -1,422
  -1,494
  -1,569
  -1,649
  -1,732
  -1,819
  -1,911
  -2,007
  -2,108
  -2,214
  -2,325
  -2,442
  -2,565
  -2,693
  -2,829
  -2,970
  -3,119
  -3,276
  -3,440
  -3,612
  -3,793
  -3,983
  -4,182
  -4,392
  -4,612
Prev. year cash balance distribution, $m
 
  4,953
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  13,757
  9,776
  10,832
  11,961
  13,165
  14,449
  15,818
  17,276
  18,828
  20,479
  21,504
  23,369
  25,351
  27,455
  29,689
  32,059
  34,572
  37,236
  40,059
  43,051
  46,220
  49,574
  53,126
  56,884
  60,860
  65,066
  69,514
  74,216
  79,186
  84,439
Discount rate, %
 
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
 
  12,990
  8,669
  8,966
  9,183
  9,312
  9,347
  9,286
  9,128
  8,874
  8,530
  7,837
  7,373
  6,846
  6,270
  5,661
  5,035
  4,409
  3,797
  3,215
  2,672
  2,180
  1,743
  1,364
  1,045
  782
  571
  406
  282
  190
  124
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

United Technologies Corporation is engaged in providing high technology products and services to the building systems and aerospace industries around the world. The Company operates through four segments: Otis; UTC Climate, Controls & Security; Pratt & Whitney, and UTC Aerospace Systems. Otis operates as an elevator and escalator manufacturing, installation and service company. UTC Climate, Controls & Security segment is engaged in providing heating, ventilating, air conditioning (HVAC) and refrigeration solutions. The Pratt & Whitney segment supplies aircraft engines for the commercial, military, business jet and general aviation markets. Pratt & Whitney segment provides fleet management services and aftermarket maintenance, repair and overhaul services. The UTC Aerospace Systems segment provides aerospace products and aftermarket service solutions for aircraft manufacturers, airlines, regional, business and general aviation markets, military, space and undersea operations.

FINANCIAL RATIOS  of  United Technologies (UTX)

Valuation Ratios
P/E Ratio 20.3
Price to Sales 1.8
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 26.4
Price to Free Cash Flow 57.1
Growth Rates
Sales Growth Rate 2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -0.1%
Cap. Spend. - 3 Yr. Gr. Rate -1.8%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 78.7%
Total Debt to Equity 86.7%
Interest Coverage 7
Management Effectiveness
Return On Assets 6.7%
Ret/ On Assets - 3 Yr. Avg. 7.9%
Return On Total Capital 10.2%
Ret/ On T. Cap. - 3 Yr. Avg. 12.6%
Return On Equity 18.4%
Return On Equity - 3 Yr. Avg. 21.4%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 27.6%
Gross Margin - 3 Yr. Avg. 28.4%
EBITDA Margin 17.9%
EBITDA Margin - 3 Yr. Avg. 18.2%
Operating Margin 14.3%
Oper. Margin - 3 Yr. Avg. 14.6%
Pre-Tax Margin 12.5%
Pre-Tax Margin - 3 Yr. Avg. 13%
Net Profit Margin 8.8%
Net Profit Margin - 3 Yr. Avg. 11%
Effective Tax Rate 23.8%
Eff/ Tax Rate - 3 Yr. Avg. 27.4%
Payout Ratio 40.9%

UTX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UTX stock intrinsic value calculation we used $57244 million for the last fiscal year's total revenue generated by United Technologies. The default revenue input number comes from 2016 income statement of United Technologies. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our UTX stock valuation model: a) initial revenue growth rate of 4.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.9%, whose default value for UTX is calculated based on our internal credit rating of United Technologies, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of United Technologies.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of UTX stock the variable cost ratio is equal to 23.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $36731 million in the base year in the intrinsic value calculation for UTX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.2% for United Technologies.

Corporate tax rate of 27% is the nominal tax rate for United Technologies. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the UTX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for UTX are equal to 43%.

Life of production assets of 26.4 years is the average useful life of capital assets used in United Technologies operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for UTX is equal to 3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $27579 million for United Technologies - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 801.991 million for United Technologies is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of United Technologies at the current share price and the inputted number of shares is $101.6 billion.

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COMPANY NEWS

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▶ Boeing, 3M Dominate DJIA on Thursday   [Jan-25-18 04:01PM  24/7 Wall St.]
▶ [$$] United Technologies to Bring Back Cash From Overseas   [12:16PM  The Wall Street Journal]
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▶ United Technologies beats Street 4Q forecasts   [06:56AM  Associated Press]
▶ Longleaf Partners Comments on United Technologies   [Jan-22-18 04:12PM  GuruFocus.com]
Financial statements of UTX
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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