Should You Investigate Otis Worldwide Corporation (NYSE:OTIS) At US$87.54?

Today we're going to take a look at the well-established Otis Worldwide Corporation (NYSE:OTIS). The company's stock saw a decent share price growth in the teens level on the NYSE over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Otis Worldwide’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Otis Worldwide

Is Otis Worldwide Still Cheap?

According to my valuation model, Otis Worldwide seems to be fairly priced at around 10.79% above my intrinsic value, which means if you buy Otis Worldwide today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $79.02, there’s only an insignificant downside when the price falls to its real value. What's more, Otis Worldwide’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of Otis Worldwide look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 33% over the next couple of years, the future seems bright for Otis Worldwide. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

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 advantageous 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. In terms of investment risks, we've identified 2 warning signs with Otis Worldwide, and understanding these should be part of your investment process.

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.