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Better-than-Expected 2Q16 Operations Propel United Technologies

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United Technologies declares 2Q16 earnings

United Technologies (UTX), a diversified industrial (RGI) conglomerate, released its earnings report for 2Q16 on July 26, 2016. The stock increased 3.1% to $107.89 on the day, as the company upgraded its sales and earnings guidance on the back of decent gains in underlying operations. In this series, we’ll discuss various aspects of its 2Q16 quarterly performance.

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United Technologies’ earnings in 2Q16

UTX’s adjusted earnings per share (or EPS) rose by 9% year-over-year (or YoY) to $1.82 in 2Q16 as against Wall Street consensus estimates of $1.68. The rise in EPS was primarily an effect of a YoY decline of share count by 6%. A 1% increase in sales, which led to a 0.4% increase in adjusted operating profits, made up the remaining portion of the EPS expansion.

The company repurchased just $36 million worth of shares in 2Q16. Much of the decline in the share count reflected in 2Q16 had occurred in the last quarter of 2015. Therefore, the decline in share count was already factored into estimates and the disparity in estimates and actuals was largely due to better operations.

Quarterly performance among competitors

General Electric (GE), UTX’s major peer in the aerospace (ITA) and industrial (RGI) sectors, declared its earnings on July 22, 2016. General Electric’s stock fell by 1.6% after it posted EPS of $0.51, beating Wall Street’s estimate by $0.05. The 16% fall in General Electric’s industrial orders is a key area of concern, especially when some of its purchases are capital-intensive in nature and could weaken GE’s performance in the second half of the year if they’re pushed to 2017.

Honeywell International (HON) also declared its earnings on July 22. Investors interested in understanding Honeywell’s operating performance in 2Q16 can read Honeywell Q2 Results Leave a Sour Taste for Investors.

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