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Why United Technologies Corporation (UTX) Earnings Should Fly Higher Soon

United Technologies CorporationUnited Technologies Corporation (NYSE:UTX) is scheduled to release its quarterly earnings report on Tuesday, but investors haven’t bothered waiting to start the celebration, as they’ve bid the stock to new all-time highs. Yet even though analysts are expecting a slight drop in net income this quarter, United Technologies earnings should start benefiting in the near future from the company’s newly expanded presence in the aerospace industry.

United Technologies Corporation (NYSE:UTX) has grown considerably thanks to its acquisition last year of aerospace supplier Goodrich, strengthening its position within the Dow Jones Industrial Average (Dow Jones Indices:.DJI). With so much potential in the aerospace business, the company is in a great position to capitalize on growth opportunities from a variety of players in the industry. Let’s take an early look at what’s been happening with United Technologies Corporation (NYSE:UTX) over the past quarter and what we’re likely to see in its quarterly report.

Stats on United Technologies

Analyst EPS Estimate $1.57
Change From Year-Ago EPS (3.1%)
Revenue Estimate $16.37 billion
Change From Year-Ago Revenue 18.6%
Earnings Beats in Past 4 Quarters 4

Source: Yahoo! Finance.

When will United Technologies earnings start flying higher?
Analysts have stuck by their calls on United Technologies Corporation (NYSE:UTX)’s earnings in recent months, keeping their estimates stable both for the June quarter and for the full 2013 year. That hasn’t held the stock back, though, which has climbed 11% since mid-April.

Like many companies, United Technologies has been doing a good job of fighting revenue headwinds by boosting margins and squeezing out more profits. In its first quarter, United Tech fell short of sales estimates by half a billion dollars, but it managed to produce a dime-per-share earnings beat and reiterated its full-year earnings guidance.

The big driver for United Tech’s future growth is the commercial aerospace industry. Aircraft manufacturer The Boeing Company (NYSE:BA) believes that demand for new planes will come in at around $4.8 trillion over the next 20 years, and between United Tech’s long-standing Pratt & Whitney engine business and Goodrich providing components like electrical power systems and aircraft wheels and brakes, United Technologies Corporation (NYSE:UTX) should reap its fair share of that big pie.

But United Tech isn’t just involved in commercial aircraft. Earlier this month, its engines played a key role in the launch of Northrop Grumman Corporation (NYSE:NOC)‘s X-47B unmanned aircraft. Although defense-related business has suffered from budget cuts and the constraints of sequestration, it remains an important part of United Tech’s overall strategy. A successful test flight recently for United Tech’s Sikorsky MH-60R helicopters in connection with a sale to the Australian Defense Ministry also shows the company’s international appeal.

In the United Technologies Corporation (NYSE:UTX) earnings report, be sure to remember to look at the company’s Otis elevator business. In the midst of stronger economic growth in the U.S., the elevator business could see nice gains if construction activity starts to pick up. That would provide a much-needed tailwind for United Tech’s prospects that could be the catalyst for further gains in its stock.

The article Why United Technologies Earnings Should Fly Higher Soon originally appeared on and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool owns shares of Northrop Grumman.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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