Otis Worldwide Corporation OTIS is benefiting from strategic investments in research and development, and digital initiatives, which are fostering its innovation capabilities. Higher backlog levels, across its New Equipment segment and Modernization (under the Service segment) unit also indicate solid top-line prospects for the company.

The Zacks Consensus Estimate for this currently Zacks Rank #3 (Hold) company's 2024 earnings has risen to $3.87 per share from $3.82 in the past 30 days, indicating growth of 9.3% from the year-ago reported figure. First-quarter 2024 earnings are expected to increase 8.8% year over year.

OTIS also delivered a trailing four-quarter earnings surprise of 6.7%, on average. The growth prospect is further solidified with a VGM Score of B, backed by a Growth Score of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and the prospects of an outperformance in the near term.

However, the aforementioned tailwinds are partially offset by headwinds in the form of high costs and expenses along with the high concentration of the company’s business in the international market.

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Shares of this leading elevator and escalator manufacturing, installation and service company have increased 11.4% in the past three months compared with the Zacks Building Products - Miscellaneous industry’s 15.7% growth.

Factors That Make the Stock Attractive

Strategic Investments: One of the primary strategies of Otis includes tactical investments in innovations and other initiatives that foster its growth prospects. The company maintained its research and development investment in 2023 as well, investing $144 million and 1% of net sales. Furthermore, in the same year, it also invested about $57 million in digital and strategic initiatives.

At 2023 end, it had 11 R&D centers and 17 factories across the world, primarily in China, India, Japan, France, Germany, Spain and the United States. These centers are strategically placed to enable the efficient development of engineering solutions. Also, it has approximately 1,200 engineers globally, with an intense focus on digital initiatives, software, design and user interface, and experience.

Growing Backlog Levels: Otis is witnessing growth prospects through an increase in orders across both its reporting segments, New Equipment and Service. This uptrend is backed by its innovation capabilities and the strategic execution of its long-term strategy to create value for its customers.

As of Dec 31, 2023, orders under the New Equipment segment and Modernization services (under the Service segment) increased year over year by 2.9% and 11%, respectively. The uptick in the orders attributed to the growth backlog levels, which increased year over year for the New Equipment segment and Modernization services by 2% and 15%, respectively. The company is optimistic about the growth trend as it expects the positive momentum to be carried into 2024.