United Technologies (UTX) 2012 Review

United Technologies (UTX) is an industrial conglomerate which manufacturers and services aircraft engines (Pratt & Whitney), manufacturers heating, ventilating and air conditioning equipment (Carrier), manufacturers and services elevators (Otis), builds helicopters (Sikorsky) and manufacturers aerospace and industrial products (Hamilton Sundstrand).

The company has earned an 18-20% return on equity over the last ten years while growing profits and dividends at a 14-15% rate. While UTX’s businesses were impacted by the global economic slowdown, the company has returned to its historical growth rate because:

(1) its main businesses possess a large parts and service component which adds stability to earnings,

(2) the pending acquisition of Goodrich should add to earnings per share growth,

(3) its strong cash flow allows for further acquisitions.