Intrinsic value of United Technologies - UTX

Previous Close

$123.30

  Intrinsic Value

$138.97

stock screener

  Rating & Target

hold

+13%

Previous close

$123.30

 
Intrinsic value

$138.97

 
Up/down potential

+13%

 
Rating

hold

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 98.5

 

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
  2.70
  2.93
  3.14
  3.32
  3.49
  3.64
  3.78
  3.90
  4.01
  4.11
  4.20
  4.28
  4.35
  4.42
  4.47
  4.53
  4.57
  4.62
  4.65
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.83
  4.85
  4.87
  4.88
  4.89
Revenue, $m
  57,244
  58,790
  60,512
  62,410
  64,484
  66,736
  69,166
  71,779
  74,578
  77,569
  80,756
  84,146
  87,746
  91,563
  95,606
  99,884
  104,405
  109,180
  114,220
  119,537
  125,142
  131,050
  137,272
  143,825
  150,723
  157,983
  165,621
  173,656
  182,106
  190,993
  200,335
Variable operating expenses, $m
 
  13,507
  13,824
  14,173
  14,554
  14,967
  15,414
  15,894
  16,408
  16,958
  17,543
  15,460
  16,122
  16,823
  17,566
  18,352
  19,182
  20,060
  20,986
  21,963
  22,992
  24,078
  25,221
  26,425
  27,692
  29,026
  30,430
  31,906
  33,458
  35,091
  36,808
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
  51,156
  52,415
  53,728
  55,098
  56,525
  58,011
  59,556
  61,161
  62,830
  64,562
  63,654
  65,521
  67,457
  69,466
  71,549
  73,709
  75,951
  78,274
  80,683
  83,180
  85,771
  88,456
  91,241
  94,128
  97,123
  100,230
  103,451
  106,791
  110,258
  113,854
Operating income, $m
  8,172
  7,633
  8,098
  8,683
  9,387
  10,211
  11,156
  12,223
  13,417
  14,739
  16,194
  20,492
  22,225
  24,106
  26,141
  28,335
  30,695
  33,230
  35,947
  38,854
  41,962
  45,279
  48,816
  52,584
  56,594
  60,859
  65,392
  70,205
  75,315
  80,735
  86,482
EBITDA, $m
  10,134
  11,296
  11,789
  12,405
  13,143
  14,003
  14,988
  16,098
  17,338
  18,708
  20,215
  21,862
  23,655
  25,598
  27,698
  29,961
  32,396
  35,008
  37,807
  40,801
  44,000
  47,414
  51,052
  54,927
  59,049
  63,432
  68,089
  73,034
  78,281
  83,846
  89,745
Interest expense (income), $m
  1,157
  1,128
  1,215
  1,309
  1,412
  1,525
  1,648
  1,780
  1,922
  2,075
  2,238
  2,412
  2,596
  2,792
  3,000
  3,221
  3,454
  3,700
  3,960
  4,235
  4,524
  4,830
  5,151
  5,490
  5,847
  6,223
  6,619
  7,035
  7,472
  7,933
  8,417
Earnings before tax, $m
  7,133
  6,505
  6,883
  7,374
  7,975
  8,685
  9,508
  10,443
  11,494
  12,664
  13,956
  18,080
  19,629
  21,314
  23,140
  25,114
  27,242
  29,530
  31,987
  34,620
  37,438
  40,450
  43,665
  47,094
  50,747
  54,636
  58,773
  63,171
  67,842
  72,802
  78,065
Tax expense, $m
  1,697
  1,756
  1,858
  1,991
  2,153
  2,345
  2,567
  2,820
  3,103
  3,419
  3,768
  4,882
  5,300
  5,755
  6,248
  6,781
  7,355
  7,973
  8,636
  9,347
  10,108
  10,921
  11,790
  12,715
  13,702
  14,752
  15,869
  17,056
  18,317
  19,657
  21,078
Net income, $m
  5,055
  4,748
  5,025
  5,383
  5,821
  6,340
  6,941
  7,624
  8,391
  9,245
  10,188
  13,199
  14,329
  15,559
  16,892
  18,333
  19,886
  21,557
  23,350
  25,272
  27,330
  29,528
  31,875
  34,378
  37,045
  39,884
  42,904
  46,115
  49,525
  53,146
  56,987

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
  84,833
  87,319
  90,058
  93,051
  96,300
  99,807
  103,577
  107,616
  111,932
  116,531
  121,423
  126,618
  132,126
  137,960
  144,132
  150,656
  157,547
  164,820
  172,492
  180,581
  189,105
  198,084
  207,540
  217,494
  227,969
  238,991
  250,586
  262,780
  275,603
  289,084
Adjusted assets (=assets-cash), $m
  82,549
  84,833
  87,319
  90,058
  93,051
  96,300
  99,807
  103,577
  107,616
  111,932
  116,531
  121,423
  126,618
  132,126
  137,960
  144,132
  150,656
  157,547
  164,820
  172,492
  180,581
  189,105
  198,084
  207,540
  217,494
  227,969
  238,991
  250,586
  262,780
  275,603
  289,084
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
  25,280
  26,020
  26,836
  27,728
  28,696
  29,741
  30,865
  32,069
  33,355
  34,725
  36,183
  37,731
  39,372
  41,111
  42,950
  44,894
  46,947
  49,115
  51,401
  53,811
  56,351
  59,027
  61,845
  64,811
  67,933
  71,217
  74,672
  78,306
  82,127
  86,144
Working capital, $m
  6,644
  1,764
  1,815
  1,872
  1,935
  2,002
  2,075
  2,153
  2,237
  2,327
  2,423
  2,524
  2,632
  2,747
  2,868
  2,997
  3,132
  3,275
  3,427
  3,586
  3,754
  3,931
  4,118
  4,315
  4,522
  4,739
  4,969
  5,210
  5,463
  5,730
  6,010
Total debt, $m
  23,901
  23,363
  25,168
  27,156
  29,329
  31,687
  34,234
  36,971
  39,904
  43,037
  46,376
  49,927
  53,699
  57,698
  61,933
  66,414
  71,150
  76,153
  81,433
  87,003
  92,876
  99,064
  105,583
  112,448
  119,674
  127,280
  135,282
  143,699
  152,552
  161,861
  171,649
Total liabilities, $m
  62,127
  61,589
  63,394
  65,382
  67,555
  69,913
  72,460
  75,197
  78,130
  81,263
  84,602
  88,153
  91,925
  95,924
  100,159
  104,640
  109,376
  114,379
  119,659
  125,229
  131,102
  137,290
  143,809
  150,674
  157,900
  165,506
  173,508
  181,925
  190,778
  200,087
  209,875
Total equity, $m
  27,579
  23,244
  23,925
  24,676
  25,496
  26,386
  27,347
  28,380
  29,487
  30,669
  31,930
  33,270
  34,693
  36,203
  37,801
  39,492
  41,280
  43,168
  45,161
  47,263
  49,479
  51,815
  54,275
  56,866
  59,593
  62,464
  65,484
  68,660
  72,002
  75,515
  79,209
Total liabilities and equity, $m
  89,706
  84,833
  87,319
  90,058
  93,051
  96,299
  99,807
  103,577
  107,617
  111,932
  116,532
  121,423
  126,618
  132,127
  137,960
  144,132
  150,656
  157,547
  164,820
  172,492
  180,581
  189,105
  198,084
  207,540
  217,493
  227,970
  238,992
  250,585
  262,780
  275,602
  289,084
Debt-to-equity ratio
  0.867
  1.010
  1.050
  1.100
  1.150
  1.200
  1.250
  1.300
  1.350
  1.400
  1.450
  1.500
  1.550
  1.590
  1.640
  1.680
  1.720
  1.760
  1.800
  1.840
  1.880
  1.910
  1.950
  1.980
  2.010
  2.040
  2.070
  2.090
  2.120
  2.140
  2.170
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
  4,748
  5,025
  5,383
  5,821
  6,340
  6,941
  7,624
  8,391
  9,245
  10,188
  13,199
  14,329
  15,559
  16,892
  18,333
  19,886
  21,557
  23,350
  25,272
  27,330
  29,528
  31,875
  34,378
  37,045
  39,884
  42,904
  46,115
  49,525
  53,146
  56,987
Depreciation, amort., depletion, $m
  1,962
  3,663
  3,692
  3,722
  3,756
  3,793
  3,832
  3,875
  3,921
  3,969
  4,021
  1,371
  1,429
  1,491
  1,557
  1,627
  1,701
  1,778
  1,860
  1,947
  2,038
  2,135
  2,236
  2,343
  2,455
  2,573
  2,698
  2,828
  2,966
  3,111
  3,263
Funds from operations, $m
  2,344
  8,412
  8,716
  9,105
  9,578
  10,133
  10,773
  11,499
  12,312
  13,214
  14,209
  14,569
  15,759
  17,051
  18,450
  19,960
  21,587
  23,335
  25,211
  27,219
  29,368
  31,663
  34,111
  36,721
  39,500
  42,458
  45,602
  48,943
  52,491
  56,256
  60,251
Change in working capital, $m
  -1,536
  46
  52
  57
  62
  68
  73
  78
  84
  90
  96
  102
  108
  115
  121
  128
  136
  143
  151
  160
  168
  177
  187
  197
  207
  218
  229
  241
  254
  267
  280
Cash from operations, $m
  3,880
  8,366
  8,664
  9,048
  9,515
  10,066
  10,700
  11,420
  12,228
  13,124
  14,114
  14,467
  15,651
  16,936
  18,328
  19,832
  21,451
  23,192
  25,060
  27,060
  29,200
  31,485
  33,925
  36,524
  39,293
  42,240
  45,373
  48,702
  52,238
  55,990
  59,970
Maintenance CAPEX, $m
  0
  -931
  -958
  -986
  -1,017
  -1,050
  -1,087
  -1,127
  -1,169
  -1,215
  -1,263
  -1,315
  -1,371
  -1,429
  -1,491
  -1,557
  -1,627
  -1,701
  -1,778
  -1,860
  -1,947
  -2,038
  -2,135
  -2,236
  -2,343
  -2,455
  -2,573
  -2,698
  -2,828
  -2,966
  -3,111
New CAPEX, $m
  -2,087
  -691
  -741
  -816
  -892
  -968
  -1,045
  -1,124
  -1,204
  -1,286
  -1,371
  -1,458
  -1,548
  -1,641
  -1,738
  -1,839
  -1,944
  -2,053
  -2,167
  -2,286
  -2,410
  -2,540
  -2,676
  -2,818
  -2,966
  -3,122
  -3,284
  -3,455
  -3,634
  -3,821
  -4,017
Cash from investing activities, $m
  -2,503
  -1,622
  -1,699
  -1,802
  -1,909
  -2,018
  -2,132
  -2,251
  -2,373
  -2,501
  -2,634
  -2,773
  -2,919
  -3,070
  -3,229
  -3,396
  -3,571
  -3,754
  -3,945
  -4,146
  -4,357
  -4,578
  -4,811
  -5,054
  -5,309
  -5,577
  -5,857
  -6,153
  -6,462
  -6,787
  -7,128
Free cash flow, $m
  1,377
  6,743
  6,966
  7,247
  7,607
  8,047
  8,568
  9,170
  9,855
  10,624
  11,480
  11,694
  12,732
  13,865
  15,099
  16,435
  17,880
  19,438
  21,114
  22,913
  24,842
  26,907
  29,114
  31,471
  33,985
  36,663
  39,515
  42,549
  45,775
  49,203
  52,842
Issuance/(repayment) of debt, $m
  3,686
  1,666
  1,805
  1,989
  2,173
  2,358
  2,546
  2,737
  2,933
  3,133
  3,339
  3,552
  3,771
  3,999
  4,235
  4,481
  4,736
  5,003
  5,280
  5,570
  5,872
  6,188
  6,519
  6,865
  7,227
  7,605
  8,002
  8,418
  8,853
  9,309
  9,788
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
  1,666
  1,805
  1,989
  2,173
  2,358
  2,546
  2,737
  2,933
  3,133
  3,339
  3,552
  3,771
  3,999
  4,235
  4,481
  4,736
  5,003
  5,280
  5,570
  5,872
  6,188
  6,519
  6,865
  7,227
  7,605
  8,002
  8,418
  8,853
  9,309
  9,788
Total cash flow (excl. dividends), $m
  2,138
  8,409
  8,771
  9,235
  9,780
  10,406
  11,114
  11,907
  12,787
  13,757
  14,819
  15,246
  16,503
  17,865
  19,334
  20,916
  22,617
  24,441
  26,394
  28,483
  30,715
  33,096
  35,633
  38,336
  41,211
  44,269
  47,517
  50,967
  54,628
  58,512
  62,630
Retained Cash Flow (-), $m
  -221
  -618
  -681
  -751
  -820
  -890
  -961
  -1,033
  -1,107
  -1,182
  -1,260
  -1,340
  -1,423
  -1,509
  -1,598
  -1,691
  -1,788
  -1,888
  -1,993
  -2,102
  -2,216
  -2,336
  -2,460
  -2,591
  -2,727
  -2,870
  -3,020
  -3,177
  -3,341
  -3,513
  -3,694
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
 
  12,744
  8,090
  8,485
  8,960
  9,516
  10,153
  10,874
  11,681
  12,574
  13,558
  13,905
  15,080
  16,355
  17,735
  19,225
  20,829
  22,553
  24,401
  26,381
  28,498
  30,760
  33,173
  35,745
  38,484
  41,398
  44,497
  47,790
  51,287
  54,999
  58,936
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
 
  12,034
  7,173
  7,023
  6,879
  6,730
  6,568
  6,384
  6,171
  5,927
  5,648
  5,068
  4,758
  4,416
  4,050
  3,666
  3,271
  2,876
  2,488
  2,117
  1,769
  1,451
  1,166
  918
  707
  532
  390
  279
  195
  132
  87
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 19.7
Price to Sales 1.7
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 25.7
Price to Free Cash Flow 55.6
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 2.7% 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 798.809 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 $98.5 billion.

RELATED COMPANIES Price Int.Val. Rating
HON Honeywell Inte 153.21 134.31  hold
GE General Electr 17.65 23.56  hold
LMT Lockheed Marti 316.17 124.24  str.sell
ESL Esterline Tech 70.80 83.47  hold
HEI Heico 90.76 58.83  sell
BA Boeing 283.16 74.43  str.sell

COMPANY NEWS

▶ Stocks Close Higher As Verizon Rallies On NFL Deal   [Dec-11-17 04:20PM  Investor's Business Daily]
▶ Is It Time To Buy United Technologies Corporation (UTX)?   [Dec-07-17 06:13PM  Simply Wall St.]
▶ United Technologies Looks Ready for Takeoff   [Dec-05-17 09:07AM  TheStreet.com]
▶ 4 Top Aerospace Stocks to Consider Buying Now   [Nov-29-17 08:46PM  Motley Fool]
▶ You Should Diversify With These Industrial Dividend Stocks   [Nov-25-17 11:02AM  Simply Wall St.]
▶ Why General Electric Shares Are Rising Today   [09:58AM  Investor's Business Daily]
▶ Indexes Dip As Oil Retreats; Coke, United Tech, Home Depot Buoy Dow   [Nov-14-17 04:15PM  Investor's Business Daily]
▶ 5 Safe Haven Dividend Plays   [06:00AM  Investopedia]
▶ The Biggest Loser: General Electric's Very Bad Day   [Nov-13-17 05:28PM  Barrons.com]
▶ General Electric Company Should You Catch It at $20?   [Nov-03-17 11:57AM  InvestorPlace]
▶ This Cloud Hanging Over Boeing Rival Airbus Just Got Darker   [05:06PM  Investor's Business Daily]
▶ ETFs in Focus on Aerospace and Defense Earnings   [Oct-26-17 05:39PM  Zacks]
▶ Big Hitters Boost Blue-Chip Dow; 2 Near Entries   [10:18AM  Investor's Business Daily]
▶ Dow Bolts Higher On Q3 Reports; CAT, Polaris, GM And 3M Rally   [09:35AM  Investor's Business Daily]
▶ United Technologies Delivers the Goods   [08:52AM  Bloomberg]
▶ United Technologies tops Street 3Q forecasts   [08:28AM  Associated Press]
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.