Is There Now An Opportunity In Otis Worldwide Corporation (NYSE:OTIS)?

Today we're going to take a look at the well-established Otis Worldwide Corporation (NYSE:OTIS). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. The company's trading levels have approached the yearly peak, following the recent bounce in the share price. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Otis Worldwide’s outlook and value based on the most recent financial data to see if the opportunity still exists.

What's The Opportunity In Otis Worldwide?

According to our valuation model, Otis Worldwide seems to be fairly priced at around 9.8% below our intrinsic value, which means if you buy Otis Worldwide today, you’d be paying a fair price for it. And if you believe the company’s true value is $112.93, then there’s not much of an upside to gain from mispricing. What's more, Otis Worldwide’s share price may be more stable over time (relative to the market), as indicated by its low beta.

View our latest analysis for Otis Worldwide

What does the future of Otis Worldwide look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Otis Worldwide's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? OTIS’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on OTIS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Otis Worldwide at this point in time. For example, Otis Worldwide has 3 warning signs (and 2 which don't sit too well with us) we think you should know about.

If you are no longer interested in Otis Worldwide, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.