United Technologies Earnings Preview: Second Quarter 2009

United Technologies (UTX: 67.44 +0.10%) is scheduled to report their second quarter 2009 results before the market opens on Tuesday, July 21. Based on our analysis, we at EarningsPreviews.com are expecting UTX to report inline earnings results that meet Wall Street’s consensus expectations.

Analyst Expectations

We are forecasting revenues of $14.06 billion and EPS of $1.04. This would represent a 10% decline in revenues from last year’s $15.67 billion in the same period. The current analyst consensus estimates calls for revenues of $13.89 billion and EPS of $1.04. As recently as last month, the company reiterated its full year 2009 EPS guidance of $4.00 - $4.50.

UTC’s strong track record of outperforming Wall Street’s expectations reinforces our belief that they will at least be able to meet consensus expectations again this quarter. The company has implemented massive cost cutting measures that are expected to generate over $1 billion in savings this year alone. While UTX continues to face strong economic headwinds, we anticipate that the force of those headwinds may be abating.

Share Performance

Since the beginning of the year, United Technologies’s shares are down less than 4%. In 2008, UTX’s shares fell 30% and barely outperformed the 34% decline in the Dow Jones industrial average.

Valuation

Shares are now trading at 12x consensus 2010 EPS estimates. This is below the relative valuations of their peer group. UTX’s shares appear to be undervalued in relation to their peers and we would expect the stock to appreciate over the next 12 months as the global economic situation improves.

Recommendation: Buy with a $60 price target.