Will United Technologies Corporation (UTX) Help You Retire Rich? – The Boeing Company (BA)

United Tech has made some big moves over the past year, spending $16.5 billion and assuming another $1.9 billion in debt to buy out aircraft-component maker Goodrich last July. This, combined with UTC’s decision to divest itself of its Pratt & Whitney Power Systems business and its UTC Power fuel-cell segment, has changed United Tech from a highly diversified conglomerate into a company much more focused on aerospace.

That move may turn out well for United Technologies Corporation (NYSE:UTX). The Boeing Company (NYSE:BA) has projected that the commercial-aerospace industry has the potential to bring in $4.5 trillion in revenue over the next 20 years. United Tech is a major supplier to The Boeing Company (NYSE:BA) and the rest of the industry, and it’s now looking to grab a bigger piece of that growing pie.

The challenge that United Tech faces is in shifting its focus to higher-margin sales. Its U.S. revenue, which makes up 56% of its overall sales, only brings in 45% of the company’s profit, while its Asia-Pacific and European sales are much more profitable. Given potential U.S. defense cuts, United Tech should focus on international growth both to protect its overall revenue and to boost its profitability.

For retirees and other conservative investors, United Technologies Corporation (NYSE:UTX) may have limited future dividend growth with its acquisition of Goodrich, which required a big boost in debt. Given United Tech’s fairly high valuation and some degree of uncertainty as the company integrates Goodrich’s operations into its larger fold, United Tech may be better to put on the back burner in the hopes that valuations will become a bit more attractive in the near future.

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The article Will United Technologies Help You Retire Rich? originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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