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United Technologies Stock Price Rally Is Sustainable

United Technologies (NYSE: UTX) stock price rallied steadily throughout this year on the back of solid financial growth. The company’s strategy of growing cash returns for investors is adding to the upside momentum. Moreover, a strong outlook for the following quarters is among the contributor to bullish sentiments.

UTX shares are currently trading around $149, which is the highest level in its history. United Technologies stock price is up close to 37% since the beginning of this year.

UTX shares are trading at attractive valuations despite year to date rally. Its price to earnings ratio of 18 is down from the industry average of 22 times to earnings. The lower valuations are the results of significant growth in financial numbers.

UTX United Technologies Corporation daily Stock Chart

Q3 Results Supports United Technologies Stock Price and Valuations

UTX has generated third-quarter revenue of $19 billion, up 18% from the year-ago period. The organic revenue grew 5% in Q3 while the rest of the growth came from a recent acquisition. The Collins Aerospace commercial aftermarket revenue grew 78% from the same period last year. In addition, the company also experienced significant growth in margins and earnings per share.

United Technologies Stock Price...

The adjusted earnings per share rose 15% year over year in the third quarter. The cash flow generation also remains robust during the past nine months. JP Morgan analyst Tusa says, “UTX is one of the best-of-both-world stocks, a defensive growth name that trades like a beaten-down cyclical.”

Outlook Indicates Strong Future Fundamentals

The company has raised its outlook for the full year after experiencing stronger than expected growth in the past nine months.

United Technologies Stock Price...

It has raised a full-year outlook to $8.05-$8.15 per share from previous guidance of $7.90-$8.05 per share. It has also raised the full-year sales forecast to $76B-$76.5B compared to the earlier outlook of $75.5B-$77B.

Chief Executive Officer Gregory Hayes said, “Continued strength at Collins Aerospace, including the integration of Rockwell Collins, and a lower tax rate are expected to more than offset softness we are seeing at Carrier.”

Overall, United Technologies’ stock price is likely to receive backing from financial numbers. It’s a perfect stock for investors who are seeking steady growth in dividend and share price.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.