Otis Took Another Guidance Cut—But the Story Isn't Over

Summary

Otis Worldwide Today$69.72 -0.69 (-0.98%) As of 12:06 PM Eastern This is a fair market value price provided by Massive. Learn more.52-Week Range$69.16▼$94.57Dividend Yield2.52%P/E Ratio18.55Price Target$95.45 Otis Worldwide NYSE: OTIS just gave income investors a gift wrapped in a sell-off. Shares dropped by more than 2% the day the elevator giant reported Q2 2026 earnings. The company met expectations with adjusted earnings per share (EPS) of $1.01. Then, management trimmed its profit outlook for the second consecutive quarter.Get Otis Worldwide alerts:Sign Up But look past the short-term outlook, and a different story emerges. Sales are growing, the backlog is the strongest it's been in years, and the company’s dividend keeps getting bigger. For investors willing to separate this quarter's cost pressure from next year's payoff, Otis looks less like a broken story and more like a company in the middle of a renovation. Otis Earnings Show Strong Sales, But Margin Pressure PersistsNet sales in the quarter climbed 7% year-over-year to $3.86 billion, with organic growth of 6%. Service, which is Otis's highest-margin, most durable business at 94% of segment operating profit, grew organic sales 9%. Modernization orders were up 24%, and the backlog was up a striking 26% on a constant currency basis. That backlog number is a leading indicator of revenue that Otis hasn't even booked yet. That was the good news. The bad news showed up in margins. Adjusted operating profit fell to $587 million from $612 million, and adjusted operating margin contracted 180 basis points to 15.2%. Adjusted EPS, as stated earlier, came in at $1.01, down from $1.05 a year ago. New Equipment was the drag. Sales were flat, but operating profit was down 41% as new-equipment sales in China fell in the "high teens" and productivity investments bit into margins. Why Otis Lowered Guidance Despite Solid Revenue GrowthOtis didn't touch its sales outlook. Total net sales guidance stays at $15.1B to $15.3B, ...