What Is Otis Worldwide Corporation's (NYSE:OTIS) Share Price Doing?

Let's talk about the popular Otis Worldwide Corporation (NYSE:OTIS). The company's shares led the NYSE gainers with a relatively large price hike in the past couple of weeks. 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.

Our analysis indicates that OTIS is potentially overvalued!

Is Otis Worldwide Still Cheap?

According to my valuation model, Otis Worldwide seems to be fairly priced at around 9.99% above my intrinsic value, which means if you buy Otis Worldwide today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $71.83, then there isn’t really any room for the share price grow beyond what it’s currently trading. 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 kind of growth will Otis Worldwide generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to grow by 34% 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? It seems like the market has already priced in OTIS’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on OTIS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Our analysis shows 2 warning signs for Otis Worldwide (1 shouldn't be ignored!) and we strongly recommend you look at these before investing.

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.