Otis Worldwide Corporation OTIS is scheduled to report second-quarter 2026 results on July 22, before the opening bell.
In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 2.2%, while net sales topped it by 2%. On a year-over-year basis, the bottom line declined 3.3%, while the top line grew 6.4%.
OTIS’ earnings surpassed the consensus mark in two of the trailing four quarters, missed on one occasion and met on the remaining occasion, with an average surprise of 1.4%.
How Are Estimates Placed for OTIS Stock?
For the second quarter, the Zacks Consensus Estimate for earnings per share (EPS) has trended downward to $1.00 from $1.01 in the past 30 days. The estimated figure indicates a 4.8% decline from the year-ago adjusted EPS of $1.05.
The consensus mark for net sales is pegged at $3.72 billion, indicating 3.5% growth from the year-ago figure of $3.6 billion.
Otis Worldwide Corporation Price and EPS Surprise
Otis Worldwide Corporation price-eps-surprise | Otis Worldwide Corporation Quote
Key Factors to Note for OTIS’ Q2 Earnings
Sales
Otis’ second-quarter top line is likely to have gained year over year, driven by the increased contributions from the Service segment (which contributed 67.8% to first-quarter 2026 net sales). The Service segment is expected to have gained due to favorable market trends for maintenance and repair demand, alongside an improvement in the modernization business. The company’s focus on its modernization strategy has been boding well for its prospects and is likely to have added incremental value to its orders and backlog during the quarter, thus boosting the top line.
Besides, the company’s investments in digital connectivity and product innovation are likely to have added to the top-line growth. Recent initiatives like Otis ROBUST and Viva Solutions, alongside major investments in WeMaintain, an AI-enabled service provider, support long-term differentiation and higher-value service opportunities for OTIS.
However, weak performance in the New Equipment segment (which contributed 32.2% to first-quarter 2026 net sales) is likely to have restricted the top-line growth to some extent during the second quarter due to ongoing demand softness and pricing pressure, mainly in China and the broader Asia Pacific region.
For the second quarter, our Zacks model predicts the Service segment’s net sales to increase year over year by 7.5% to $2.49 billion, with the New Equipment segment’s net sales declining 2.5% to $1.24 billion.
Margins
The bottom line of OTIS is expected to have decreased in the second quarter due to elevated labor and material costs, investments in field and sales resources, and an unfavorable portfolio mix toward lower-value units. Ongoing tariff uncertainties, shipment delays linked to geopolitical issues, project delays in the Middle East and growing inflationary pressures are likely to have been taking a toll on OTIS’ margins and profitability structure.
Although through the UpLift transformation, Otis continues to enhance operating efficiency and cost structure, the current macro headwinds are pulling back near-term profitability prospects.
We expect the adjusted operating margin in the Service and New Equipment segments to contract 100 basis points (bps) and 180 bps year over year to 23.9% and 3.5%, respectively.
Moreover, the selling, general and administrative (SG&A) expenses in the quarter are likely to have increased due to annual wage increases, higher costs from organizational initiatives, costs supporting ongoing operational execution and the impacts from foreign exchange. For the to-be-reported quarter, our model expects SG&A expenses to increase year over year by 4.3% to $520.6 million.
What Our Model Unveils for OTIS
Our proven model does not predict an earnings beat for Otis this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, it is not the case here.
OTIS’ Earnings ESP: The company has an Earnings ESP of -0.57%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
OTIS’ Zacks Rank: Currently, the stock carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With the Favorable Combination
Here are some stocks from the Zacks Industrial Products sector, which per our model, have the right combination of elements to deliver an earnings beat this time around.
Crane Company CR has an Earnings ESP of +4.73% and a Zacks Rank of 2.
Crane’s earnings topped the consensus mark in all of the last four quarters, with the average surprise being 11.3%. Earnings for the company’s second quarter of 2026 are expected to grow 11.4% year over year.
W.W. Grainger, Inc. GWW has an Earnings ESP of +2.50% and a Zacks Rank of 2.
Grainger’s earnings topped the consensus mark in three of the last four quarters and missed on the remaining occasion, with the average surprise being 4.2%. Earnings for the company’s second quarter of 2026 are expected to increase 13.1% year over year.
Caterpillar Inc. CAT has an Earnings ESP of +3.82% and a Zacks Rank of 3.
Caterpillar’s earnings topped the consensus mark in three of the last four quarters and missed on the remaining occasion, with the average surprise being 9.6%. Earnings for the company’s second quarter of 2026 are expected to grow 32.4% year over year.
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Otis Worldwide Corporation (OTIS): Free Stock Analysis Report
Caterpillar Inc. (CAT): Free Stock Analysis Report
W.W. Grainger, Inc. (GWW): Free Stock Analysis Report
Crane Company (CR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).