While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Atkore (ATKR - Free Report) . ATKR is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
Investors should also recognize that ATKR has a P/B ratio of 1.38. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.40. Over the past 12 months, ATKR's P/B has been as high as 2.43 and as low as 1.24, with a median of 1.69.
Finally, investors should note that ATKR has a P/CF ratio of 7.64. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. ATKR's current P/CF looks attractive when compared to its industry's average P/CF of 16.99. Within the past 12 months, ATKR's P/CF has been as high as 10.09 and as low as 3.84, with a median of 5.51.
These are just a handful of the figures considered in Atkore's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ATKR is an impressive value stock right now.
HARVEY, Ill.--(BUSINESS WIRE)--Atkore Inc. (the “Company”) (NYSE: ATKR), a leading manufacturer of electrical products for commercial, industrial, data center, and solar applications, today announced that John Deitzer, Chief Financial Officer, and Matt Kline, Vice President of Treasury & Investor Relations, are scheduled to participate in investor meetings at the KeyBanc Industrials & Basic Materials Conference on May 27, 2026 in Boston, MA.
To learn more about Atkore Inc. please visit the company's website at https://investors.atkore.com
About Atkore Inc.
Atkore is a leading manufacturer of electrical products for commercial, industrial, data center, and solar applications. With 5,400 employees and $2.9B in sales in fiscal year 2025, we deliver sustainable solutions to meet the growing demands of electrification and digital transformation. To learn more, please visit www.atkore.com.
Dissemination of Company Information
Atkore intends to make future announcements regarding company developments and financial performance through its website, www.atkore.com, as well as through press releases, filings with the Securities and Exchange Commission, conference calls, media broadcasts, and webcasts.
Atkore delivered a strong Q2 FY26, with net sales up 4.2% YoY and sequential growth for the first time since 2022. ATKR's portfolio simplification and focus on domestic electrical infrastructure drive higher margins and operational efficiency, supported by divestitures and facility closures. Data center electrification is fueling double-digit growth in key product lines, with management guiding for continued mid-single-digit organic volume growth.
Philadelphia, Pennsylvania--(Newsfile Corp. - May 15, 2026) - Kaskela Law LLC announces that it is investigating potential breach of fiduciary duty claims concerning Atkore Inc. (NYSE: ATKR) on behalf of the company's long-term shareholders.
Click here for additional information: https://kaskelalaw.com/case/atkore/
Recently an amended securities fraud complaint was filed against Atkore on behalf of certain investors who purchased shares of the company's stock between August 2, 2022 and August 4, 2025 (the "Wrongdoing Period").
According to the complaint, through a series of partial disclosures beginning in May 2024, investors slowly learned the truth about Atkore's scheme to artificially inflate the price of PVC Pipe. The complaint further details how, following such disclosures, shares of the company's stock declined in value from a Wrongdoing Period high of $190.00 per share to under $60.00 per share in August 2025.
The investigation seeks to determine whether the members of Atkore's board of directors violated the securities laws and/or breached their fiduciary duties in connection with the above alleged misconduct.
Current Atkore shareholders who purchased or acquired their shares prior to August 4, 2025 are encouraged to contact Kaskela Law LLC (D. Seamus Kaskela, Esq. or Adrienne Bell, Esq.) at (484) 229 - 0750 for additional information about this investigation and their legal rights and options.
Alternatively, investors may submit their information to the firm by clicking on the following link (or if necessary, by copying and pasting the link into your browser):
https://kaskelalaw.com/case/atkore/
ABOUT KASKELA LAW:
Kaskela Law LLC exclusively represents investors in securities fraud, corporate governance, and merger & acquisition litigation on a contingent basis, which means that the firm's clients never pay any out-of-pocket costs for legal representation. For additional information about Kaskela Law LLC, including the firm's recent notable recoveries for investors, please visit www.kaskelalaw.com.
This communication may constitute attorney advertising in certain jurisdictions.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/297568
Source: Kaskela Law LLC
Ready to Announce with Confidence? Send us a message and a member of our TMX Newsfile team will contact you to discuss your needs.
LOS ANGELES, May 17, 2026 (GLOBE NEWSWIRE) -- The Schall Law Firm, a national shareholder rights litigation firm, announces that it is investigating claims on behalf of long-term investors in Atkore Inc. (“Atkore” or “the Company”) (NYSE: ATKR).
The investigation focuses on determining if the Array Digital board breached its fiduciary duties to shareholders, and if the Company issued false and/or misleading statements and/or failed to disclose information pertinent to investors.
If you are a shareholder, click here to participate.
We also encourage you to contact Brian Schall of the Schall Law Firm, 2049 Century Park East, Suite 2460, Los Angeles, CA 90067, at 310-301-3335, to discuss your rights free of charge. You can also reach us through the firm's website at www.schallfirm.com, or by email at [email protected].
The Schall Law Firm represents investors around the world and specializes in securities class action lawsuits and shareholder rights litigation.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and rules of ethics.
CONTACT:
The Schall Law Firm
Brian Schall, Esq.
310-301-3335 [email protected]
Momentum investing is essentially the opposite of the tried-and-tested Wall Street adage -- "buy low and sell high." Investors following this investing style typically avoid betting on cheap stocks and waiting long for them to recover. They believe instead that one could make far more money in lesser time by "buying high and selling higher."
Everyone likes betting on fast-moving trending stocks, but it isn't easy to determine the right entry point. These stocks often lose momentum when their future growth potential fails to justify their swelled-up valuation. In that phase, investors find themselves invested in shares that have limited to no upside or even a downside. So, betting on a stock just by looking at the traditional momentum parameters could be risky at times.
A safer approach could be investing in bargain stocks with recent price momentum. While the Zacks Momentum Style Score (part of the Zacks Style Scores system) helps identify great momentum stocks by paying close attention to trends in a stock's price or earnings, our 'Fast-Paced Momentum at a Bargain' screen comes handy in spotting fast-moving stocks that are still attractively priced.
Atkore Inc. (ATKR - Free Report) is one of the several great candidates that made it through the screen. While there are numerous reasons why this stock is a great choice, here are the most vital ones:
A dash of recent price momentum reflects growing interest of investors in a stock. With a four-week price change of 11.1%, the stock of this company is certainly well-positioned in this regard.
While any stock can see a spike in price for a short period, it takes a real momentum player to deliver positive returns for a longer time frame. ATKR meets this criterion too, as the stock gained 34.9% over the past 12 weeks.
Moreover, the momentum for ATKR is fast paced, as the stock currently has a beta of 1.66. This indicates that the stock moves 66% higher than the market in either direction.
Given this price performance, it is no surprise that ATKR has a Momentum Score of B, which indicates that this is the right time to enter the stock to take advantage of the momentum with the highest probability of success.
In addition to a favorable Momentum Score, an upward trend in earnings estimate revisions has helped ATKR earn a Zacks Rank #2 (Buy). Our research shows that the momentum-effect is quite strong among Zacks Rank #1 and #2 stocks. That's because as covering analysts raise their earnings estimates for a stock, more and more investors take an interest in it, helping its price race to keep up. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Most importantly, despite possessing fast-paced momentum features, ATKR is trading at a reasonable valuation. In terms of Price-to-Sales ratio, which is considered as one of the best valuation metrics, the stock looks quite cheap now. ATKR is currently trading at 0.97 times its sales. In other words, investors need to pay only 97 cents for each dollar of sales.
So, ATKR appears to have plenty of room to run, and that too at a fast pace.
In addition to ATKR, there are several other stocks that currently pass through our 'Fast-Paced Momentum at a Bargain' screen. You may consider investing in them and start looking for the newest stocks that fit these criteria.
This is not the only screen that could help you find your next winning stock pick. Based on your personal investing style, you may choose from over 45 Zacks Premium Screens that are strategically created to beat the market.
However, keep in mind that the key to a successful stock-picking strategy is to ensure that it produced profitable results in the past. You could easily do that with the help of the Zacks Research Wizard. In addition to allowing you to backtest the effectiveness of your strategy, the program comes loaded with some of our most successful stock-picking strategies.
Click here to sign up for a free trial to the Research Wizard today.
Alphabet (GOOG +0.57%) (GOOGL +0.74%) turned heads when it announced plans to raise $80 billion in capital by issuing new equity. The plans include a $10 billion private placement with Berkshire Hathaway (BRKA +0.33%) (BRKB +0.06%), $15 billion in convertible preferred stock, $15 billion in public issuance, and a $40 billion authorization to sell stock over time at the market price, starting in the second half of 2026.
Investors may be wondering why Alphabet would choose to dilute its shares this way. Management has spent years buying back its stock, more than offsetting the stock-based compensation it provides to employees. They may also be wondering why it would choose to use equity to raise capital. Alphabet already raised more than $85 billion over the past year by selling debt, but given its sizable asset base, it could easily issue more debt.
But the real question investors need to ask is fairly simple: Will Alphabet use the capital it raises to generate more economic value than existing shareholders ceded in ownership? In other words, will the additional $80 billion meaningfully grow the pie at Alphabet?
Image source: Getty Images.
Accelerating the build-out of a once-in-a-generation opportunity There are really two parts to Alphabet's equity raise: About $50 billion will go toward artificial intelligence infrastructure, and the other $30 billion will go toward paying taxes related to vesting equity awards. Investors can think of the latter as additional stock-based compensation.
I contend that both have the potential to produce excellent value, and the acceleration in spending is well worth it.
Management recently shared plans to spend between $180 billion and $190 billion on capital expenditures this year, mostly on its AI build-out. That was a slight step up from its prior guidance of $175 billion to $185 billion. What's more, management said, "We expect our 2027 capex to significantly increase compared to 2026."
Management has good reason to invest as much as possible in building data center capacity right now. Google Cloud's revenue growth accelerated to 63% last quarter as its top line reached $20 billion, and that growth was driven by additional capacity coming online. Even as Alphabet reported higher revenue for its cloud computing business, its backlog doubled sequentially to $462 billion, with expectations of recognizing 50% of that over the next 24 months.
Alphabet plans to add another $50 billion to its capex budget via this equity sale, which could be seen as a sign that management is confident in its ability to generate strong returns on invested capital via its cloud computing business.
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Using stock to retain top talent The $30 billion to cover employee taxes on stock-based compensation can be seen in part as an investment in retaining top engineering talent. Alphabet's progress in hardware design (its custom Tensor Processing Units), large language model development (the Gemini family), and the use of its models to enhance its core products (search and advertising) may be overshadowed by the growth of Google Cloud. But investors shouldn't overlook it.
The TPU business has been a key attraction for Google Cloud, with these AI accelerator chips offering better price performance than standard GPUs on many AI tasks. Management said it's starting to sell the chips directly to other companies for use in their own data centers, including a recent deal with Anthropic. The stand-alone chip business could be another growth driver for Alphabet.
The growth rate of Google Search revenue accelerated to 19% on the strength of higher engagement and better ad targeting. Search has seen improving engagement thanks to AI Overviews and AI Mode, which provide AI-generated answers to user queries. Advertising has gotten a boost from a better understanding of search intent and new generative AI advertising features, making ad creatives more effective.
Overall, Alphabet looks poised to answer the question posed at the top of this article in the affirmative. That's excellent news for current shareholders, and the long-term returns could be even better.
While the company is likely to experience negative free cash flow as it pours money into building massive AI data center capacity, it should return to generating large cash flows in the near future. The company could experience a dilution of 2% on earnings per share this year, possibly less, due to its use of convertible shares. When free cash flow returns to being positive, however, investors should expect management to go back to repurchasing stock in short order, which will ultimately increase shareholders' stakes in the business.
Consider that Berkshire Hathaway, which takes a long-term view of businesses, sees good value in Alphabet at around $350 per share. Investors should take advantage of the recent share price pullback amid dilution fears to buy the stock at a price close to that level.
Few investors command more credibility than Warren Buffett. During the six decades he led Berkshire Hathaway (NYSE:BRK-A | BRK-A Price Prediction)(NYSE:BRK-B), shareholders enjoyed a cumulative return of roughly 6,099,294%! That works out to a 19.7% compound annual growth rate, compared with approximately 46,000% for the S&P 500, or 10.5% annually.
Yet Buffett has long argued that most investors should avoid stock-picking altogether. At Berkshire Hathaway’s annual meetings and in shareholder letters, he has repeatedly recommended a low-cost S&P 500 index fund as the best choice for most retirement savers.
And investors have listened. Funds are flowing into index funds at record levels. Vanguard’s S&P 500 ETF (NYSEARCA:VOO) recently became the first exchange-traded fund (ETF) in history to surpass $1 trillion in assets under management. But by following Buffett’s advice, investors are putting their retirement portfolios at significant risk.
Buffett’s Advice Helped Create a Trillion-Dollar ETF According to Reuters, the S&P 500 ETF has attracted $69 billion of net inflows so far in 2026, following $118 billion in 2024 and $138 billion in 2025. No ETF has attracted more investor money this year.
Certainly, “buying the market” has looked particularly attractive, too. The S&P 500 completed nine consecutive weeks of gains last week, climbing to fresh all-time highs, and rewarding investors who stayed the course. While the index is on track this week to see that string broken, as artificial intelligence stocks sold off following Broadcom‘s (NASDAQ:AVGO) disappointing earnings report, the market is still up 10.7% in 2026.
Yet that very response shows why investors are putting themselves in danger. They believe they are getting broad market diversification, but in reality they are buying the same stocks that have sent the S&P to new heights. The numbers tell the story.
The Diversification Investors Think They Own Investors buying VOO, SPDR S&P 500 ETF (NYSEARCA:SPY), or iShares Core S&P 500 ETF (NYSEARCA:IVV) often believe they’re reducing risk by spreading their money across 500 companies.
And while they are buying those stocks, the reality is more concentrated. According to MacroMicro data, the 10 largest stocks in the S&P 500 represented 37.5% of the index’s total market capitalization at the end of May. While that is down from the all-time high of 43% reached in March, it is still one of the greatest concentrations historically.
Consider, 10 years ago, the S&P 500’s top 10 stocks represented just 15.3% of the index’s market cap, and when Buffett told shareholders at Berkshire’s annual meeting five years later they would be better off buying index funds than individual stocks, they only represented 27.2%. The concentration has increased by nearly 38% since then.
Of those 10 stocks, seven of them are directly tied to the AI boom:
Nvidia (NASDAQ:NVDA) Alphabet (NASDAQ:GOOG) and (NASDAQ:GOOGL) Microsoft (NASDAQ:MSFT) Amazon (NASDAQ:AMZN) Taiwan Semiconductor Manufacturing (NYSE:TSM) Broadcom In other words, investors buying index funds to avoid concentration risk are increasingly buying the very same stocks driving AI enthusiasm and pushing market valuations higher.
What Happens If the AI Trade Slows? Retirement investing is about protecting purchasing power over decades, not maximizing returns over a single year. That’s where concentration becomes a concern.
If AI spending continues expanding, index investors will likely benefit. But if corporate AI budgets slow, data center spending moderates, or earnings growth misses expectations, as occurred with Broadcom, the same stocks that powered the market higher could weigh heavily on index performance.
Regardless of how you look at it, an index where 10 stocks account for more than one-third of its value carries a different risk profile than one where those same stocks represented 15% a decade ago.
Buying the market used to mean buying broad diversification. Today, it increasingly means making a large bet on a handful of technology leaders.
Key Takeaway In short, Buffett’s advice remains sound in principle, but investors should recognize how much the market has changed since he first championed index funds.
VOO, SPY, and IVV remain useful investment vehicles. However, they no longer provide the same level of diversification they once did because a small group of AI-driven giants now dominates the index.
When all is said and done, retirement investors shouldn’t assume that buying an S&P 500 fund automatically eliminates concentration risk. The data shows the opposite. Understanding what you actually own — not what you think you own — may be the most important retirement planning lesson of all.
(This is the Warren Buffett Watch newsletter, news and analysis on all things Warren Buffett and Berkshire Hathaway. You can sign up here to receive it every Friday evening in your inbox.)
ABEL GOES HIS OWN WAY WITH NEW INVESTMENTS IN HOME BUILDING ... AND AIBuffett praises new CEO for 'fast' and 'smooth' acquisitionWarren Buffett tells CNBC's Becky Quick new Berkshire Hathaway CEO Greg Abel has "launched" with his first major deal, the $6.8 billion acquisition of Taylor Morrison Home, a residential homebuilder and developer with operations in 12 states.
On Monday's "Squawk Box," Becky quoted Buffett from a phone conversation the day before when the deal was announced:
"Greg did this faster than I could have done it, smoother than I could have done it, and I never talked to the CEO.
"He has launched."
watch now
Becky noted that when Buffett wanted to do a deal, he would move quickly, and "this is basically what Greg has picked up and done, too."
She reports Abel went to Arizona and spent around five hours with Taylor Morrison CEO Sheryl Palmer, but when he came back, he did not think he had a deal.
Then, a few days later, Palmer called to say the price was fair and her board was ready to proceed.
Becky says Abel spoke with Buffett and Berkshire lead director Sue Decker but didn't tell the rest of the board until after the deal had been completed.
"That's kind of the Berkshire way, to try and move quickly on these things," she added.
watch now
Appearing on Monday's "Squawk on the Street" later that morning, Palmer said joining Berkshire is a "once in a lifetime opportunity for the company, for the brand, and for team members across the country." (The entire interview is available to CNBC Pro subscribers.)
She started speaking with Abel "probably just a number of weeks ago," and his "pitch" was that Berkshire "has this wonderful collection of on-site builders, and they build generally around the first-time buyer ... and if you think about the Berkshire eco-system, and what they've build for decades, I think what Greg saw was the opportunity, on a national scale, to build a platform."
Berkshire housing and home improvement subsidiaries include Clayton Homes, Shaw Industries, Johns Manville, and Benjamin Moore.
In a joint news release on the deal, Abel echoed Palmer, saying, "Over time, we expect to unify our site-built homebuilding operations into a combined platform enabling us to deliver the dream of homeownership to more Americans."
Christopher Davis at Hudson Value Partners points out to Bloomberg the goal of unifying operations is a "notable departure" from Berkshire's long-standing practice of letting subsidiaries run independently, but he thinks investors "will welcome that evolution in approach."
CFRA Research analyst Cathy Seifert tells the AP, "Given Greg's strength as an operator it will be interesting to see if he does consolidate these units to get some greater scale and efficiencies."
Reuters reports UBS analyst John Lovallo is telling clients a combination of Taylor Morrison with Clayton would create one of the country's five largest homebuilders.
He calls the acquisition "a strong vote of confidence in the mid-long term outlook for the homebuilding industry," which has a shortage of around 7 million homes.
Abel adds to big bet on Alphabet's AI ambitionsAnd in what appears to be a vote of confidence in the future of artificial intelligence, Berkshire will invest $10 billion in Alphabet, helping to fund that company's big spending on its "world-class AI compute infrastructure to meet its unprecedented customer demand."
As part of a larger plan to raise around $80 billion from stock sales, Google's parent will use a private placement to sell $5 billion of its Class A shares (GOOGL) to Berkshire for $351.81 each and another $5 billion of Class C shares (GOOG) for $348.20 each.
According to Bloomberg, the purchase was the result of a "stealthy weekend call" to Berkshire by Goldman Sachs, the firm putting together Alphabet's enormous equity offering, and a "rapid signoff" from Abel, offering "fresh reassurance that Warren Buffett's investing conglomerate remains the first port of call for companies in need of a big check or a vote of confidence."
When the deal was announced after Monday's close of trading, Berkshire's GOOGL purchase price was 5.5% below the stock's market value and GOOG was a 6.5% bargain.
Now the discounts are down to 4.5% and 4.8%.
Berkshire already owns $21.3 billion of Alphabet's Class A shares, making it the fifth largest position in its equity portfolio.
It was apparently Abel's decision to more than triple the stake in the first quarter to almost 58 million shares from the close to 18 million shares Berkshire purchased in last year's third quarter.
When the new shares are added, Alphabet will probably become Berkshire's third or fourth biggest stock holding, rivaling its long-held Coca-Cola stake, which is currently worth almost $32 billion.
Abel's enthusiasm for Alphabet is a marked contrast to Buffett's great reluctance to invest in tech.
He felt he didn't have the ability to predict which companies would prosper in the long term, so he was "perfectly willing to trade away a big payoff for a certain payoff" in areas he better understood, especially during what turned out to be a dot-com bubble in the late 1990s.
So far, Buffett hasn't said anything publicly about Berkshire's Alphabet investments.
BUFFETT & BERKSHIRE AROUND THE INTERNETSome links may require a subscription:
CNBC.com: Berkshire's bet on Taylor Morrison suggests the housing market may have bottomedWall Street Journal on MSN: Berkshire Hathaway and Japanese builders see the same opportunity in US housingWall Street Journal on MSN: Why Berkshire Hathaway went window-shopping at Macy'sDBusiness Magazine (Detroit): My Day with Warren BuffettCNBC Halftime Report video: Trade Tracker: Bill Baruch buys more Berkshire HathawayInvestopedia: How Warren Buffett's Circle of Competence Rule Can Guide Smarter Investing DecisionsCNBC Cures: Warren Buffett disciple Guy Spier built career on value investing. A rare cancer changed everythingHIGHLIGHTS FROM CNBC'S BUFFETT ARCHIVEBuffett missed the boat on Google (2017)In a 2017 interview with CNBC, Warren Buffett says he should have known about Google's profit potential because GEICO had been a major customer of the company.
WARREN BUFFETT: Google I should have had some insight into, because GEICO was a heavy user very early on.
So here we saw value in something. At — at that time — I have no idea what we're paying for a click now, but — but we were paying $10 or $11 a click for something that had no cost of goods sold, and we were going to keep doing it. I mean we could see that.
So — I should have had more insight into that.
Now, whether Bing was going to come along or other people were going to take away the market, that's another question.
Whether you had sort of a — first user advantage that would be — would prevail — and there is a lot of technology to it.
So — so somebody could have come along with a better technological product that I would not have had any insights into that.
I certainly had insights into the benefit for the user.
Berkshire Cash as of March 31: $397.4 billion (Up 6.5% from Dec. 31)
Excluding Rail Cash and Subtracting T-Bills Payable: $380.2 billion (Up 3.0% from Dec. 31)
Berkshire repurchased $234 million of its shares in Q1 2026.
(All figures are as of the date of publication, unless otherwise indicated)
BERKSHIRE'S TOP EQUITY HOLDINGS - Jun. 5, 2026Berkshire's top holdings of disclosed publicly traded stocks in the U.S. and Japan, by market value, based on the latest closing prices.
Holdings are as of March 31, 2026, as reported in Berkshire Hathaway's 13F filing on May 15, 2026, except for:
Mitsubishi, which is as of April 30, 2026The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.
QUESTIONS OR COMMENTSPlease send any questions or comments about the newsletter to me at [email protected]. (Sorry, but we don't forward questions or comments to Buffett himself.)
If you aren't already subscribed to this newsletter, you can sign up here.
Also, Buffett's annual letters to shareholders are highly recommended reading. There are collected here on Berkshire's website.
According to the latest report, the stock portfolio of Berkshire Hathaway (BRKA +0.33%) (BRKB +0.06%), the company Warren Buffett built, had 67% of its assets in just five stocks. Should you copy that? My answer would be no. Permit me to explain why.
Image source: The Motley Fool.
First, though, here are the five stocks:
Stock
Recent Market Value of Stake
% of Berkshire Portfolio
Apple
$57.8 billion
21.99%
American Express
$45.9 billion
17.43%
Coca-Cola
$30.4 billion
11.56%
Bank of America
$25.0 billion
9.52%
Chevron
$17.5 billion
6.64%
Data source: WhaleWisdom.com, as of June 3.
There are several reasons you might not want to copy Berkshire:
You might know little about the companies in question, in which case you should not devote your hard-earned dollars to them. We never learn in real time whether Berkshire has been adding to or shrinking -- or eliminating -- its position in any company. So you might buy shares of a company that you soon learn Berkshire has been selling. If you own only the five stocks, that's a lot of concentration -- you'll have too many eggs in one basket. That can be less problematic for expert investors like Buffett and his successor investors, such as the new CEO, Greg Abel, and Ted Weschler, who has been investing billions for Berkshire for many years now. But for us regular investors, that's risky. It's possible that Berkshire's stock portfolio might not perform as well in the future as it did under Buffett. Of course, you might invest in all the stocks in Berkshire's portfolio in one easy move -- by investing in Berkshire Hathaway itself. You'll then be a part owner of dozens of wholly owned subsidiaries such as GEICO, Benjamin Moore, NetJets, Dairy Queen, McLane, and the entire BNSF railroad, along with lots of stock positions in various companies. Berkshire recently had close to $400 billion in cash, so further additions are likely in the coming years. Even Berkshire is buying Berkshire shares.
Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Selena Maranjian has positions in American Express, Apple, and Berkshire Hathaway. The Motley Fool has positions in and recommends American Express, Apple, Berkshire Hathaway, and Chevron. The Motley Fool has a disclosure policy.
It's no secret that Warren Buffett, one of the greatest investors in history, long avoided technology stocks while CEO of Berkshire Hathaway. Buffett was never shy about admitting that he didn't understand tech.
But eventually he started putting the conglomerate's money into tech. Here's a look at what it took for the Oracle of Omaha to add tech to his impressive portfolio.
Image source: Getty Images.
Buffett's general philosophy Warren Buffett taught a lot of investors a lot of things over the decades. Here are three points that stand out to me.
Keep it simple: Stick with businesses and industries that you could easily explain to a child. In Buffett's words, "Never invest in a business you cannot understand." Have patience: Buffett once said, "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes." Committing to a stock for the long term typically only happens after you have taken the time to get to know the company. Plus, holding an asset for the long term gives it time to benefit from decades of compounding. A 90/10 rule can be a great choice for those who aren't interested in picking stocks: Allocate 90% of your money to a low-cost S&P 500 index fund and the remaining 10% to short-term government bonds is a sound way to invest. What's changed in recent years I can see why Buffett loosened his opposition to tech stocks over the years. Some large tech platforms now fit his traditional criteria of businesses that are understandable and have durable moats.
Of course, Buffett and Berkshire didn't invest in every technology company. I think Buffett looked for ones he thoroughly understood. With his habit of looking for "moats over momentum," he surely had no interest in hyped-up flashes in the pan. He wanted to know that the company he invested in had a sustainable competitive advantage that could protect profits over time.
Today, in addition to Apple, you'll find Amazon and Alphabet in Berkshire's portfolio.
For younger investors When asked in 2023 which sector or asset class he would want to get very knowledgeable about if he were going to live another 50 years, the super-investor's answer was clear: technology. "It's going to be a huge field," the then-92-year-old Buffett said. "There are likely to be a few enormous winners, a lot of disappointments..." and being able to pick the winners could move the needle for Berkshire Hathaway.
While Buffett's opinion of tech has certainly come a long way, he remains dedicated to fully understanding a company before investing a dollar.
Dana George has positions in Amazon and Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
Warren Buffett transformed Berkshire Hathaway (BRKA +0.33%) (BRKB +0.06%) from a failing textile company into a massive trillion-dollar conglomerate over his 60 years as CEO. At the core of the transformation is an investment philosophy rooted in buying excellent companies at a fair value and holding them for the long run, preferably forever.
In the last few years of his tenure as CEO, Buffett found few great investment opportunities, allowing Berkshire's cash pile to grow to nearly $400 billion. Greg Abel has shown a willingness to start deploying relatively small chunks of that capital in his first few months as CEO, and he recently agreed to a deal that would put about $8.5 billion of Berkshire's cash to work in an acquisition that follows in Buffett's footsteps.
Image source: Getty Images.
Meet the next Berkshire Hathaway company On May 31, Berkshire Hathaway announced plans to acquire Taylor Morrison Home (TMHC 0.01%) for approximately $6.8 billion in cash. When you add the company's existing debt, the deal's enterprise value is $8.5 billion. (Berkshire will likely retire that debt with its cash pile.)
Abel's decision to buy the homebuilder comes at a time when the industry is facing challenges due to high mortgage rates and expensive housing prices. That's led to bargain-priced valuations for some industry stocks, and Abel wasn't afraid to pounce on the opportunity.
The deal he struck has Berkshire paying just over 1.1 times book value and 9 times trailing earnings for the stock. Despite the premium paid over the prevailing stock price at the time, that's still a lower valuation than practically every other company in the beaten-down industry.
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But the long-term outlook for homebuilders in America remains solid. There's a housing shortage in the United States. A recent White House report says the U.S. needs 10 million new homes. That's a massive opportunity.
Scale can be a key advantage in the current market, though, as larger homebuilders can manage overhead and exercise greater purchasing power to acquire land and materials at lower costs. To that end, Berkshire plans to combine Taylor Morrison's operations with its own Clayton Homes to create a top-five homebuilder.
That makes Abel's first major acquisition very much a Buffett-type move. He took the opportunity to buy a beaten-down company facing cyclical headwinds and requiring patience to realize its full value. What's more, it's a business that may be more valuable under the Berkshire umbrella than as a stand-alone company, thanks to complementary businesses within Berkshire.
What Abel's big move could mean for its equity portfolio Berkshire Hathaway owned stakes in two other homebuilders as of its most recent quarterly update: Lennar and NVR. Both positions are relatively small, worth only about $1 billion total as of this writing. If Abel is extremely bullish on the housing sector, he might keep both holdings, but considering they compete with Taylor Morrison, it would make just as much sense for Berkshire to liquidate them.
Abel has shown a willingness to consolidate Berkshire's equity holdings, eliminating many of the stocks bought by former investment manager Todd Combs in the first quarter, as well as several other smaller positions. That suits Abel's strengths as an operator first and portfolio manager second. Whereas Buffett was well known for his investment acumen, Abel has a very limited track record. As such, it makes sense that Abel would sell Lennar and NVR, but that doesn't mean either is a bad investment right now.
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Abel is showing a swiftness in deal-making that Buffett hasn't shown for years. He was instrumental in the OxyChem acquisition last year and oversaw the Tokio Marine investment this year. That could mean focusing on fully acquiring relatively small companies at a good value while allocating the marketable equity portfolio to fewer, much larger companies that can make a serious dent in Berkshire's cash pile. The most recent example of the latter is Alphabet, where Abel has put over $20 billion of cash to work since taking the CEO position.
Abel is certainly making Berkshire his own, but investors can clearly see the impact of Buffett in his most recent move.
Anyone who owns a stake in Berkshire Hathaway (BRKA +0.33%) (BRKB +0.06%) may be more than a little frustrated that the company seemingly isn't doing anything with its idle cash. As of the latest look, it's got $397.4 billion on the sidelines, versus only $328 billion in stock holdings, at a time when the market is roaring.
Like predecessor Warren Buffett, though, current Berkshire CEO Greg Abel understands something many investors may not: This conglomerate's structure isn't what it seems on the surface. Its equity investments aren't necessarily the only growth engine.
Image source: Getty Images.
Not quite what you think it is You likely know Berkshire Hathaway as a pseudo-mutual fund that also owns a bunch of privately held businesses, including Fruit of the Loom, Duracell batteries, Pilot travel centers, GEICO insurance, flooring company Shaw, and more.
That's never quite been what Berkshire Hathaway is, however. First and foremost, it's an insurer, and a brilliantly run one at that. As Buffett himself wrote in 2009's shareholder letter:
Insurers receive premiums upfront and pay claims later... This collect-now, pay-later model leaves us holding large sums -- money we call "float" -- that will eventually go to others. Meanwhile, we get to invest this float for Berkshire's benefit. Though individual policies and claims come and go, the amount of float we hold remains remarkably stable in relation to premium volume. Consequently, as our [insurance] business grows, so does our float.
And its float has most definitely grown, from $39 million in 1970 to $27.9 billion in 2000 to $176 billion as of last year. That's an annualized growth rate of 16.5%, outpacing the S&P 500's average annual return during this stretch.
That's also roughly in line with Berkshire Hathaway's share price gains for most of its existence, by the way, suggesting that its growing insurance business is a major contributor to its net shareholder returns. It's also been a more consistent contributor than the company's individual stock holdings.
And make no mistake -- Abel looks at this business just like Buffett did. As he plainly stated in his 2025 shareholder letter published early in 2026, Berkshire's insurance float is indeed "the capital we hold to pay future losses and, in the meantime, invest for Berkshire's benefit."
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Still creating value Abel undoubtedly needs to do something constructive with all that idle cash sooner or later. And he will.
He doesn't necessarily need to rush it, however, to provide current shareholders with a reasonable amount of growing value right now. They're getting it, even if it's not readily evident, and even if the company's cash pile has grown annoyingly large.
For what it's worth, though, there's some movement on this front -- just not quite the kind most investors may have been expecting. Rather than buying and holding a bunch of new individual stocks, following January's acquisition of Occidental Petroleum's chemical arm OxyChem, late last month, Berkshire announced it will be wholly acquiring homebuilder Taylor Morrison Home. As privately owned holdings, these businesses will contribute cash flow rather than capital gains to Berkshire's bottom line, which, of course, will add to already record-breaking operating profits ... and the company's ever-growing float.
In Q1 2026, investment management behemoth Berkshire Hathaway NYSE: BRK.B made a portfolio decision that few saw coming. According to its 13F SEC filing, Berkshire took a new position in Macy’s NYSE: M—one of the United States' most iconic department stores.
Macy's Today
M
Macy's
$25.57 +0.53 (+2.12%)
As of 03:32 PM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$10.54▼
$25.65Dividend Yield3.01%
P/E Ratio10.57
Price Target$20.30
While Macy’s has closed many locations since its peak in 2015, the firm still remains one of the top names in its industry. In fact, in 2024, Macy’s ranked as the world’s largest department store based on sales, with revenue of approximately $23.7 billion.
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However, this would not be immediately apparent from the trajectory of Macy’s stock. Overall, shares are down around 50% from their all-time high reached in 2015. Meanwhile, Macy’s market capitalization has fallen from nearly $25 billion to around $6 billion, losing 75% of its value in 11 years.
Given the massive shift toward e-commerce, Macy’s has become a stock that few investors would think to consider. However, Berkshire clearly sees something in this retail name, investing $55 million. Let’s break down where Macy’s has been and where it is today to try to understand why Berkshire sees value in this stock.
Macy’s Fall From Grace: Stores, Revenue, and Margins SinkAs noted, Macy’s has seen a significant drop in its store count in the span of the past decade or so. In 2016, Macy’s had over 850 total stores. This included over 700 of its flagship Macy's-branded stores, over 50 Bloomingdale's stores, and over 70 Bluemercury stores.
Today, the total store count has fallen to less than 675. The reduction in Macy’s-branded storefronts has driven all of this decline, with there now being fewer than 450 physical locations. Meanwhile, Bloomingdale's and Bluemercury locations have actually increased, with store counts of over 60 and 150, respectively.
Last 12 months' revenue came in at $22.7 billion, down meaningfully since 2024 and down around 19% from its calendar 2014 peak of $28.1 billion. Macy’s operating margin hit a very thin 2.3% in its latest quarter, well down from its level of over 6% during the comparable quarter in 2014.
Considering these metrics, it starts to become much clearer why Macy’s market capitalization has fallen so drastically. However, looking over a shorter timeline, Macy’s has shown improvements in its business—demonstrated by its recently released earnings report.
Macy’s Posts Huge Adjusted EPS Beat, Raises GuidanceMacy’s reported its Q1 2026 earnings in early June—putting up solid numbers on several fronts. (Note that the firm’s fiscal reporting period is slightly behind the calendar period.) The company posted revenue of $4.89 billion, an increase of 1.8% year over year (YOY), and significantly above estimates of $4.61 billion.
Adjusted earnings per share (EPS) rose by 18% YOY to 13 cents, drastically better than anticipated. Analysts expected adjusted EPS of just 2 cents, implying a drop of 82% YOY. The company attributed this outperformance to sales growth that far exceeded expectations.
Comparable sales, which eliminate the effect of store count changes, rose 3% YOY—its strongest growth since 2022. This contrasted with Macy’s comparable sales growth guidance of 0.5% to 1.5% and growth of -2% from a year ago. Additionally, Macy’s achieved its huge adjusted EPS beat despite a 4-cent tariff headwind.
Macy’s also raised its guidance for the full year. The company now expects midpoint comparable sales growth of 0.85%, compared to 0% previously. Its midpoint adjusted EPS guidance now sits at $2.10, up from $2. Its updated adjusted EPS guidance implies a YOY decline of 9.5%.
One of Macy’s key initiatives is to revamp its Macy's-branded stores. This comes as luxury brands Bloomingdale's and Bluemercury are growing much faster, with comparable sales rising 10.2% YOY and 6.4% YOY, respectively. Meanwhile, Macy's-branded comparable sales grew just 1.6% YOY.
To fix this, the company is improving Macy’s stores through its “Reimagine” initiative. Reimagine improvements include altering the mix of merchandise and visual marketing within the stores. The 200 Macy’s locations that have already undergone Reimagine improvements showed better comparable sales growth of 2.4%. This provides evidence that the Reimagine strategy is paying off.
Macy’s: A Recovering Company With a Lot Left to ProveMacy's Stock Forecast Today12-Month Stock Price Forecast:
$20.30
-20.10% Downside
Reduce
Based on 14 Analyst Ratings
Current Price$25.41High Forecast$27.00Average Forecast$20.30Low Forecast$9.00Macy's Stock Forecast Details
Overall, there are some clear reasons why Macy’s would be attractive to Berkshire. While the company has struggled mightily over the past decade, its recent improvements are real. Still, it is worth noting that Berkshire is not making a big bet on this stock. At $55 million, it represents a tiny fraction of the firm’s overall equity portfolio of over $250 billion. Should Macy’s continue to make progress on its recovery, it is possible that Berkshire could increase its position over time.
Notably, Wall Street analysts are not overly optimistic. The MarketBeat consensus price target of $20.30 implies around 10% downside in shares. The average of two targets updated after the firm’s report is $25, implying moderate upside.
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When the S&P 500 fell by 9% earlier this year, Warren Buffett didn't flinch. Many people assumed that, since stock prices had fallen, Buffett would take advantage of a few value opportunities.
He did not. In fact, the former chairman of Berkshire Hathaway (BRKA +0.33%)(BRKB +0.06%) didn't even seem particularly moved by the pullback.
In an interview earlier this year, Buffett said of the U.S. stock market: "Three times since I've taken over Berkshire, it's gone down more than 50%. This is nothing."
Image source: The Motley Fool.
Buffett sees no value in U.S. stocks The implication is clear. Stocks might have been lower than they were compared to their highs a couple of months earlier. But they were still very expensive on a long-term basis, and Buffett wasn't going to budge until stocks got much cheaper.
Berkshire ended first-quarter 2026 with nearly $400 billion in cash and Treasury bills on the books. To the average investor, this might be viewed as an unnecessary cash drag on a portfolio. But Buffett has consistently favored patience over emotion. When the time is right, he'll have the dry powder. Now, he says, is not the time to use it.
The S&P 500 is currently trading at a forward price-to-earnings (P/E) ratio of 21. That's down quite a bit from its peak, thanks to the big earnings boom the S&P 500 has enjoyed from artificial intelligence development. But that's not the metric that Buffett pays close attention to.
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The Buffett indicator hits a new record The Buffett indicator isn't called the Buffett indicator for nothing. This measure, which compares the value of corporate equities to U.S. gross domestic product, is the one he looks at. At around 230% currently, it's in unprecedented territory and clearly not the kind of level Buffett would be looking to buy at.
In the past, Buffett has said: "If the percentage relationship falls to the 70% or 80% area, buying stocks is likely to work very well for you." Unfortunately, it hasn't been there since the fallout from the financial crisis. He also said: "If the ratio approaches 200% as it did in 1999 and a part of 2000, you are playing with fire."
Understanding that, it's pretty easy to see why Buffett wasn't compelled to do anything with Berkshire Hathaway's cash. His successor, Greg Abel, has a different view. He's made significant purchases on Berkshire's behalf in Alphabet recently that put Berkshire much further into the AI ecosystem.
Warren Buffett isn't predicting a crash based on his comments or his lack of trading. But he is saying pretty clearly that there's not nearly the level of value in the market today that's compelling him to buy.
Although Warren Buffett stepped down as CEO of Berkshire Hathaway at the end of last year, he's likely still involved in capital allocation decisions behind the scenes. CEO Greg Abel is now running the show.
Based on recent investments that the conglomerate made, the Oracle of Omaha and his successor are incredibly bullish on a monster artificial intelligence (AI) stock.
Image source: Getty Images.
Alphabet (GOOGL +0.74%) (GOOG +0.57%) recently revealed plans to raise nearly $85 billion in equity capital to fund its AI infrastructure investments. This announcement wasn't the only surprise.
The market also learned that Berkshire Hathaway will invest $10 billion through a private placement, evenly split between Alphabet's Class A and Class C shares. This will significantly increase the company's stake in the "Magnificent Seven" stock, as the conglomerate owned nearly 58 million Alphabet Class A shares as of March 31, making it the fifth-largest holding.
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There are some key takeaways from this news.
Even the most financially sound enterprises need more capital than anticipated to fund the AI boom. Meta Platforms might also raise fresh equity capital to power its AI ambitions. The level of spending across the industry is groundbreaking.
With Berkshire Hathaway on its side, though, Alphabet is receiving a valuable stamp of approval, which might signal confidence to the rest of the market.
And with Abel now in the CEO seat, the latest moves might indicate that the conglomerate is further warming up to the tech sector.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, and Meta Platforms. The Motley Fool has a disclosure policy.
For the 60 years Warren Buffett served as CEO of Berkshire Hathaway (BRKA +0.33%) (BRKB +0.06%), he employed a policy of not meddling in each subsidiary's managers' leadership of their respective business. His thinking? They were smart enough on their own to build a business he was interested in owning.
Buffett's predecessor, Greg Abel, may not feel quite the same way, though. After announcing its plans last month to wholly acquire and then privatize homebuilder Taylor Morrison Home Corp. (TMHC 0.01%), last week, Abel alluded to the possibility of combining Taylor with another Berkshire company -- manufactured- and mobile-homes builder Clayton Homes.
It's not happened yet. And it may never actually come to pass.
If it does, it would represent a change in Berkshire Hathaway's long-held aversion to fixing things that aren't actually broken.
Rational, but not necessarily for the best It's certainly not a complete mismatch. Both companies build homes, which means both outfits require building materials, and both companies are subject to the same housing market ebbs and flows. The key difference is simply that Taylor erects its homes onsite, while Clayton fabricates its homes offsite and then transports them to their destination. To this end, each outfit also serves a distinctly different segment of the same target market.
Homebuilding isn't necessarily a business that benefits from diversification and shared resources, though. Supplies like lumber are often locally sourced, and in the case of Taylor, construction is often localized to a particular geographical market or subdivision.
Image source: Getty Images.
Then there's the cultural differences. Taylor Morrin's domestic arm of the company has been around for over a century and has been led by CEO Sheryl Palmer since 2007. That's a pretty long time to establish an ethos. Meanwhile, Clayton's been around since 1956 and is currently led by Kevin Clayton, son of the company's founder. Its corporate culture is well entrenched, too.
Connect the dots. These two organizations won't likely mesh very well.
Worth watching, but not worrying about...yet Or maybe they will mesh. Never say never.
Regardless, if this were anything more than an off-the-cuff thought exercise from Abel, it's cause for concern for current and future Berkshire Hathaway shareholders. The conglomerate's 70-ish privately held companies collectively account for about one-third of Berkshire's total market value, generating on the order of $40 billion worth of operating earnings per year. One union of seemingly similar subsidiaries obviously doesn't threaten the entirety of this spendable profit. \But if this hinted plan for Clayton and Taylor becomes more common, it could slowly chip away at this cash flow. By the time it became clear it was a more sweeping problem, it could be too late to do anything about it.
Just don't read too much into the matter. As part of 2025's full-year report, Abel made a point of penning "our CEOs will never have to navigate layers of bureaucracy or have short-term earnings expectations dictated to them, leading to long-term value destruction," reflecting the fact that "our decentralized approach is a competitive advantage, attracting managers who thrive on autonomy and deliver on accountability."
In other words, don't worry about it too much...yet.
For the First Time in Brand History, Duracell Transforms the Battery Cell Itself, Featuring Messi’s Iconic Tattoos to Celebrate the “Messi Reboot” Campaign
WEST PALM BEACH, Fla.--(BUSINESS WIRE)--Duracell, the world’s leading disposable battery manufacturer, today announced the official retail rollout of its highly anticipated limited-edition battery packs in partnership with the GOAT, Lionel Messi. Following the launch of Duracell’s "Messi Reboot" campaign this spring, these first-of-their-kind packs are now available at major retailers, bringing the power behind the GOAT directly to fans ahead of this summer’s premier global soccer tournament.
From the stadium lights to the living room, these packs allow fans to power their game-day experience with a unique piece of soccer history.
Share The collaboration introduces a historic milestone for the brand, marking the first time in Duracell’s history that a celebrity-inspired design has been incorporated directly onto the battery cells. Each battery in the limited-edition packs features a design inspired by the artistry on Messi’s legendary left leg—the precise powerhouse behind his historic career. By channeling the exact limb that drives his unmatched strikes and agility, this collection transforms a household necessity into a premium collector’s item. Engineered with Duracell’s exclusive PowerBoost™ Ingredients, the batteries deliver maximum power, mirroring the high-intensity energy and technical precision Messi unleashes from his dominant leg every time he steps onto the pitch.
“We wanted to give fans a unique way to power their passion for the soccer tournament this summer,” said Javier Hernández, Global CMO at Duracell. “Bringing Messi’s iconic left leg tattoos onto our batteries is a first in brand history allowing us to merge his legendary performance with Duracell’s most advanced power delivering trusted power all summer long.”
From the stadium lights to the living room, these packs allow fans to power their game-day experience with a unique piece of soccer history. The limited edition Duracell x Messi collection is available now at all major retailers across North America, including Walmart, Amazon, and Lowe’s, just in time for the world’s biggest sporting tournament this summer.
Fans who purchase participating Duracell products will have the opportunity to win premium soccer gear and limited-edition merchandise signed by Messi himself through a national sweepstakes running now through August 30th. More details and entry forms are available at SoccerSweeps.Duracell.com.
About Duracell
Started in the 1920s, the Duracell brand and company was acquired by Berkshire Hathaway Inc. (NYSE-BRK.A, BRK.B) in 2016 and has grown to be the leader in the primary battery market in North America. The iconic Duracell brand is known the world over. Our products serve as the heart of devices that keep people connected, protect their families, entertain them, and simplify their increasingly mobile lifestyles. Visit www.duracell.com for more information.
Berkshire Hathaway (BRKA +0.33%)(BRKB +0.06%) is a shockingly diversified industrial conglomerate. However, it is classified as a finance company due to its large insurance operations. This is an important nuance to consider as you examine the nearly $400 billion in cash on the company's balance sheet. It is an important safety valve and provides firepower for investments when the time is right. But cash isn't what this business is built on; the float is.
What does Berkshire Hathaway do? From a big picture perspective, Berkshire Hathaway does a lot of things. However, former CEO Warren Buffett was really an allocator of capital, treating the company as his personal investment vehicle. Basically, buying Berkshire Hathaway was a way to trade alongside Warren Buffett. The fact that Berkshire Hathaway has a huge cash hoard today has nothing to do with Buffett's long-term success.
Image source: The Motley Fool.
The real magic in Buffett's approach is that he realized that he could use the float to invest in stocks and even to buy entire companies. The float is the cash that an insurance company generates from premiums. Some of that money will eventually be needed to pay claims, which is why most insurance companies take a conservative approach with their investments. Many insurers stick to bonds.
Buffett realized that he could be a little more aggressive and generate higher returns. That said, Berkshire Hathaway couldn't be reckless with the float. Buffett's approach is basically to buy well-run companies when they look reasonably prices and then hold for the long term. Core stock holdings include Coca-Cola (KO 0.02%) and American Express (AXP +2.07%).
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Berkshire Hathaway's story hasn't changed The bad news is that Buffett stepped down as CEO at the end of 2025. The good news is that he hand-picked his successor, Greg Abel. Abel has worked with Buffett for decades, and Buffett remains the chairman of the board, so he's available to Abel if needed. The nearly $400 billion in cash, meanwhile, provides Abel with a backstop as he takes over the CEO role.
However, the best part of the story is that Berkshire Hathaway's biggest tool, the float, is still at the core of its business model. In fact, since Buffett popularized the approach, other companies have started to copy him. The most notable is Markel Group (MKL +0.93%). However, more recently, Brookfield Corporation (BN +0.42%) has put up Berkshire Hathaway as its model, stating that its goal is to be an investment-led insurance company.
That said, if you understand the value of the float, there's no reason why you can't stick with the original: Berkshire Hathaway. Sure, there's a new CEO at the helm, but the core model hasn't changed one bit.
American Express is an advertising partner of Motley Fool Money. Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express, Berkshire Hathaway, Brookfield Corporation, and Markel Group. The Motley Fool has a disclosure policy.
Recently, Warren Buffett said that the almost 10% pullback we saw in February was not big enough to get Berkshire Hathaway (NYSE: BRK-B | BRK-B Price Prediction) excited. He pointed out that he has seen the stock market down 50% three times in his career, so a small pullback like we saw this year was nowhere near enough to create the opportunities needed to justify using some of the gigantic cash pile that Berkshire Hathaway has stuffed into Treasury T-bills. The Buffett indicator, the metric most important for justifying stock purchases at Berkshire Hathaway, compares the value of corporate equities to gross domestic product. At a whopping 230%, it is nowhere near the 70% to 80% range that Buffett has noted in the past is a solid level for buying stocks. He has also pointed out that investors are playing with fire at or above the 200% level, as was the case in 1999 and 2000.
The gigantic rally over the past five years, from June 2021 to today, is impressive. The S&P 500 is up a stunning 75%, including years with massive selloffs, like 2022. But the surge over the past two years has been propelled by first the Magnificent 7 mega-cap tech companies, then artificial intelligence and data center chip stocks, which have been very narrow, as most of the S&P has not participated in the huge gains. In fact, technology stocks now account for approximately 32% of the S&P 500’s total market value, with the five largest tech companies alone making up nearly 30% of the index. This extreme concentration has dramatically skewed the benchmark’s performance, as a handful of tech giants have been responsible for the overwhelming majority of the index’s recent gains.
Berkshire’s 11% underperformance relative to the S&P 500 in 2026 boils down to a few compounding and frustrating headwinds: a $397 billion cash pile earning T-bill yields while the market rallied hard, a deliberate retreat from equities that proved ill-timed, and a leadership transition that shook investor confidence. Its sheer size makes transformative acquisitions nearly impossible, and its “old economy” tilt toward railroads, insurance, and energy meant it sat out the AI-driven tech surge that powered index returns. Remember, the only reason the S&P 500 and the Nasdaq are up this year is the technology sector’s outperformance. In short, Berkshire got penalized for being cautious and boring, though for patient, long-term investors, that may ultimately prove to be a feature, not a bug.
Here are the five reasons why Berkshire Hathaway is my favorite stock for the rest of 2026 and the next 20 years.
Gigantic Pile of Cash Berkshire Hathaway is sitting on the largest cash pile in its history: $397.4 billion at the end of Q1 2026, equal to roughly 59% of its investable assets. In fact, it’s enough cash to buy 470 to 480 of the S&P 500 companies. That massive reserve acts as a powerful safety net in the event of a recession or market downturn, while giving CEO Greg Abel tremendous flexibility to pursue attractive acquisitions or make bold capital investments in businesses Berkshire already owns. When the right deal finally appears—and it always does—this kind of financial firepower is truly exceptional.
Strong Earnings Berkshire’s operating earnings rose 18% to $11.35 billion in Q1 2026, boosted by a robust 28.5% jump in insurance underwriting profit to $1.72 billion. Net income more than doubled to $10.1 billion. This isn’t just accounting noise; it’s a clear reflection of genuine operational strength across Berkshire’s massive portfolio of businesses.
Portfolio Built to Withstand Disruption Over the past 60 years, Berkshire has assembled a portfolio of operating businesses and investments that are remarkably resilient to disruption from AI and emerging technologies. Railroads, insurance, energy, and consumer staples form the core. These are classic businesses protected by wide, durable competitive moats that are unlikely to be upended overnight.
Buybacks Have Started Berkshire ended its 21-month buyback moratorium because its shares finally became attractive enough to repurchase. The price-to-book ratio fell to 1.4 in March, well below the 60% to 80% premium range that had kept buybacks on hold for nearly two years. Consistent with Berkshire’s long-standing policy, the company repurchases shares only when management believes the stock is trading below its intrinsic value. The resumption of buybacks is therefore a clear signal that they view the current price as undervalued. If they think it is, investors will, too.
The Right Man to Lead the Way Abel personally purchased $15 million of Berkshire shares. That amount is roughly equal to his entire after-tax annual salary. In addition, he has committed to repeating the buy each year going forward. Given his decades-long tenure at the company, Abel is unlikely to make abrupt changes to Berkshire’s direction. However, his more active management approach could still unlock meaningful growth in the years ahead. Having skin in the game and maintaining strong cultural continuity send a powerful positive signal that will likely resonate with investors for decades to come.
Berkshire’s Wholly Owned Private Companies Owning shares of Berkshire Hathaway means also owning an impressive list of private companies in the portfolio.
Insurance
GEICO (auto insurance) General Re (reinsurance) Berkshire Hathaway Reinsurance Group Alleghany Kansas Bankers Surety Transportation and Logistics
BNSF Railway (one of the largest freight railroads in North America) FlightSafety International (pilot training) NetJets (fractional aircraft ownership) Energy and Utilities
Berkshire Hathaway Energy (parent of MidAmerican Energy, PacifiCorp, NV Energy, Northern Powergrid) Manufacturing and Industrial
Marmon Holdings (100+ industrial businesses) Precision Castparts (aerospace/industrial components) IMC International Metalworking Companies Acme Brick OxyChem (acquired in January 2026 for $9.7 billion, the most recent major addition) Retail and Consumer
Dairy Queen See’s Candies Ben Bridge Jeweler Borsheims Fine Jewelry Nebraska Furniture Mart Building and Home
Benjamin Moore (paints) Clayton Homes (manufactured housing) Shaw Industries (flooring) Johns Manville (insulation/building products) Finance and Services
Berkshire Hathaway HomeServices (real estate brokerage) CORT Business Services (furniture rental) Berkadia (mortgage financing, 50% JV) Berkshire has a staggering 800 subsidiaries worldwide, but these are the flagship names that drive the bulk of operating earnings.
The Wrap Up The Berkshire Hathaway shares are trading roughly 10% off their all-time high, sitting on a record cash pile, with buybacks just resuming and a new CEO who’s eating his own cooking. For long-term investors, that’s a rare combination. That said, always do your own due diligence before investing. With an overbought stock market and the AI/data center trade still dominating investor sentiment, this may be the best opportunity to own a legendary company.
MONTECITO, Calif.--(BUSINESS WIRE)--In a coastal enclave where developable land has all but disappeared and architectural heritage is measured in decades rather than centuries, the compound at 660/670 Buena Vista Drive represents something the Montecito market rarely produces: an irreplaceable original.
If you are building a portfolio you intend to never touch again, Berkshire Hathaway (NYSE:BRK-B | BRK-B Price Prediction) warrants a central role, because it is engineered to compound capital across decades regardless of who is in the White House, what the Federal Reserve is doing, or which sector is in fashion.
Pillar One: A Business Built to Outlast Cycles Berkshire operates more like a privately run economy than a single stock. It wholly owns GEICO, Duracell, Dairy Queen, BNSF, Lubrizol, Fruit of the Loom, Helzberg Diamonds, Long & Foster, FlightSafety International, Pampered Chef, Forest River, and NetJets, alongside meaningful stakes in Kraft Heinz (26.7%), American Express (18.8%), Coca-Cola (9.32%), Bank of America (11.9%), and Apple (6.3%). The structural bias is exactly what a retirement investor wants: cyclical, cash-rich businesses like insurance (GEICO), railroads (BNSF), and utilities that are mathematically primed to benefit from the simple reality that the U.S. and global economies spend significantly more time expanding than contracting. The BEA data confirms it: across the last 20 quarters, only two showed negative GDP growth.
Pillar Two: Compounding Without a Dividend Check Berkshire pays no dividend, and that is by design. Instead of mailing income out, management reinvests every dollar at high rates of return and runs a premier capital return program through buybacks. Operating cash flow has held in a tight band for a decade, from $30.6 billion in 2024 to $49.2 billion in 2023, with $45.97 billion generated in 2025 and $10.4 billion in Q1 2026 alone. Recent annual equity repurchases include $9.17 billion in 2023 and $27.06 billion in 2021, with a 1,220,376-share repurchase on May 1, 2026. Every buyback quietly increases your ownership of the entire conglomerate.
Pillar Three: Designed to Survive What Kills Other Stocks The balance sheet is the moat under the moat. Debt-to-equity sits at 0.19, interest coverage at 11.6 times, and beta at 0.617, meaning the stock moves less than the market by design. Even in the 2022 mark-to-market storm that produced a $22.06 billion net loss, operating cash generation stayed at $37.2 billion. Insurance float gives Berkshire low-cost capital precisely when capital is most expensive elsewhere, which is why it buys when others are forced to sell.
When It Lags, and Why That Is Fine Berkshire will underperform during speculative bull markets driven by narrow technology rallies. Over the past year, BRK-B is down 1.13% while the S&P 500 ETF returned 22.91%. Over a decade, the gap is much smaller: BRK-B has returned 244.08% against the S&P 500 ETF’s 250.86%, with materially less drawdown risk along the way. The conservatism that causes the lag is the same conservatism that allows the company to be standing, and buying, when the cycle turns. Succession is in place: Greg Abel is the successor to Warren Buffett, and the operating culture he inherits is decentralized, owner-aligned, and unchanged.
With a trailing P/E of 15 and diluted EPS of $33.58, the valuation is rational. For long-horizon investors, the structure favors patient ownership.
Berkshire Hathaway (BRKA +0.38%) (BRKB +0.06%) CEO Greg Abel has only been in his new gig for a little under six months. But he's already making his mark on the conglomerate.
Abel stepped into the role after Warren Buffett served as CEO for six decades. Buffett is widely considered one of the greatest investors of all time. During his time at the helm, Berkshire's shareholders enjoyed market-crushing returns. In fact, Berkshire's stock likely received a premium simply because Buffett was CEO.
Given all that, filling Buffett's shoes is essentially an impossible task. But Abel must try, and as he begins to chart his own course for the conglomerate, he's venturing more decisively into parts of the stock market that his predecessor typically shied away from.
Here's why investors might play along.
Image source: The Motley Fool.
Joining the artificial intelligence trade The Oracle of Omaha famously said he preferred to invest in companies whose businesses he understood, but that doesn't mean he avoided investing in new sectors or industries. For instance, Buffett piled into the consumer tech giant Apple starting in 2016, and at one point, that position grew to roughly 40% of Berkshire Hathaway's massive equities portfolio.
But despite the incredible gains that artificial intelligence stocks experienced in recent years, Berkshire never got too invested in AI during Buffett's tenure. Up until recently, Berkshire held a small position in Amazon, but it's believed that the decision to make that purchase was made by former Berkshire investment manager Todd Combs.
The company also took a stake in Alphabet (GOOG +0.57%)(GOOGL +0.57%) last year, while Buffett was on his way out.
This year, Abel has significantly increased the company's position in Alphabet. In the first quarter of 2026, Berkshire more than tripled its stake in the company. More recently, Berkshire announced it would purchase an additional $10 billion in Alphabet stock as part of a massive $85 billion private placement the tech giant was making. Berkshire did get a discount on the purchase.
Alphabet is now a top-five position in Berkshire's portfolio.
Now, we can't know whether or not Buffett would have signed off on these moves if he were still CEO, but they certainly go against many of his core investment principles. For one, purchasing Alphabet this year meant buying the stock at valuations well above its average.
GOOGL PE Ratio (Forward) data by YCharts.
But what makes these investments even more in conflict with Buffett's philosophy is that Alphabet's free cash flow is expected to be negative for the next few years, due to its intense capital investments in AI infrastructure.
As a general rule, Buffett prefers to invest in companies with strong free cash flow. Also, earlier this year, during an interview on CNBC, when asked about good opportunities in the stock market, he replied, "We aren't finding things."
It's possible the sell-off triggered by the Iran war led Berkshire to scoop up Alphabet, but the recent purchase of the stock happened as the market was at or near all-time highs.
Why investors may like a more aggressive Abel Berkshire Hathaway's market cap is now above $1 trillion, and its stock portfolio alone is valued at around $326 billion. This makes it harder for Berkshire to make meaningful investments in new companies, because its portfolio is already so big that it takes a lot to move the needle.
In the meantime, in recent years, between sales of portfolio holdings and profits, Berkshire has built a cash stockpile that's closing in on $400 billion. Investors want to see the conglomerate put that money to work in more productive assets. The market has also been overtaken by AI, so investors may have been disappointed to see Berkshire miss out on the gains of stocks in that space.
One of the things that makes Berkshire so powerful is its exposure to many different sectors and parts of the economy, including insurance, railways, housing, energy, and more. AI is expected to play a massive role in the economy, so investors may be happy to see the conglomerate increase its exposure.
While Alphabet is no longer a small position in Berkshire's portfolio, it clearly won't be a deal breaker for the diversified conglomerate if the stock struggles.
Additionally, I think Alphabet is a safer way to gain exposure to AI than many of the alternatives. The stock may experience a significant pullback if the AI megatrend falters, but I think the company could navigate through such conditions and still do well in the long term.
Alphabet is fairly diversified itself, with a cloud computing arm, a chip business, a streaming platform in YouTube, an autonomous driving business with Waymo, and its cash cow Google Search business, among others.
That's why I don't think investors should be too worried about Abel's strong move into Alphabet, even if it feels quite different from what Buffett would have done.
Berkshire Hathaway B (BRK.B - Free Report) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.
Shares of this company have returned +0.4% over the past month versus the Zacks S&P 500 composite's -0.2% change. The Zacks Insurance - Property and Casualty industry, to which Berkshire Hathaway B belongs, has gained 1.2% over this period. Now the key question is: Where could the stock be headed in the near term?
Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Revisions to Earnings EstimatesHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For the current quarter, Berkshire Hathaway B is expected to post earnings of $5.19 per share, indicating a change of +0.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The consensus earnings estimate of $20.82 for the current fiscal year indicates a year-over-year change of +1%. This estimate has changed +2.8% over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $21.59 indicates a change of +3.7% from what Berkshire Hathaway B is expected to report a year ago. Over the past month, the estimate has changed +1.4%.
With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Berkshire Hathaway B.
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Projected Revenue GrowthWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.
In the case of Berkshire Hathaway B, the consensus sales estimate of $95.3 billion for the current quarter points to a year-over-year change of +3%. The $385.6 billion and $404.9 billion estimates for the current and next fiscal years indicate changes of +3.8% and +5%, respectively.
Last Reported Results and Surprise HistoryBerkshire Hathaway B reported revenues of $93.68 billion in the last reported quarter, representing a year-over-year change of +4.4%. EPS of $5.25 for the same period compares with $4.47 a year ago.
Compared to the Zacks Consensus Estimate of $95.1 billion, the reported revenues represent a surprise of -1.5%. The EPS surprise was +8.92%.
Over the last four quarters, Berkshire Hathaway B surpassed consensus EPS estimates two times. The company topped consensus revenue estimates times over this period.
ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Berkshire Hathaway B is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Berkshire Hathaway B. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
We often encourage investors to think long-term, and to invest long-term, aiming to hang on to your stocks for many years, if not decades. It can be hard to think long-term, though, in this age of artificial intelligence (AI), and cloud computing, and cryptocurrencies. Everything seems to be changing so fast, it can seem hard to pinpoint businesses that are very likely to prosper for a long time.
There are some such companies, though, which should keep rewarding you until you retire -- and beyond. They're the kinds of companies that Warren Buffett would probably appreciate, as he has said that he likes to have a good idea of where the company will be in the years ahead. Here are three such companies to mull over.
Image source: Getty Images.
1. Berkshire Hathaway My first suggestion is Warren Buffett's company, Berkshire Hathaway (BRKA +0.33%) (BRKB +0.06%). It's in a new phase, as 95-year-old Buffett has stepped down and Greg Abel is the new CEO. Many expect Abel to follow in Buffett's footsteps, and he is already continuing Buffett's habit of repurchasing shares when they seem sufficiently undervalued.
I believe that Berkshire will be in good shape many years from now because it was intentionally built to last, and many of its dozens of subsidiaries are in sturdy industries -- such as transportation and energy. These businesses include GEICO, Benjamin Moore, Dairy Queen, McLane, and the entire BNSF railroad, along with sizable chunks of other companies, such as Apple, Chevron, American Express, Coca-Cola, and Bank of America. Thanks to many of Berkshire's stock holdings, it collects billions of dollars in dividend income annually.
With a recent forward-looking price-to-earnings (P/E) ratio of 21.6 a bit below the five-year average of 21.2, the stock seems slightly undervalued.
2. Otis Worldwide Next, consider Otis Worldwide (OTIS +0.76%), which is in a business that isn't likely to be replaced by AI. It has specialized in elevators since 1853, and it has grown to a recent market value of nearly $31 billion. It's a dividend-paying stock, too, recently yielding 2.2%, and its dividend payout has doubled over the past five years. This isn't a fast-growing company -- its last quarter featured net revenue up 3% year over year and adjusted earnings per share up 11% -- but it's one that can deliver a meaningful income stream now and into your retirement years.
Otis's business model doesn't just involve selling elevator systems -- it also updates them and services them, which results in considerable recurring income. (In its last quarter, maintenance and repair revenue was up 7% year over year.) Like Berkshire, Otis has also been buying back lots of shares, leading to a total yield for shareholders of 4.8%.
Otis's stock is looking appealingly priced, too, at recent levels, with a recent forward-looking price-to-earnings (P/E) ratio of 17.7, well below the five-year average of 23.3.
3. Waste Management In a similar vein, WM (WM +0.36%) -- the company formerly known as Waste Management -- is also likely to be delivering for shareholders decades from now. Changing times aren't likely to change our need for garbage collection and recycling services, and WM is America's largest solid waste services business.
WM has been growing at a good clip, averaging annual gains of nearly 14% over the past 15 years, and it's a solid dividend payer, as well. Its dividend yield was recently 1.45% -- and that payout has averaged annual increases of 10% over the past five years.
The stock seems a bit overvalued at recent levels, with a recent forward P/E ratio of 28.2, above the five-year average of 27.5. But that's not a huge premium, and this company is likely to reward shareholders for a long time.
If these companies don't interest you sufficiently, know that there are plenty of other compelling stocks out there, too.
Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Selena Maranjian has positions in American Express, Apple, Berkshire Hathaway, and WM. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Chevron and is short shares of Apple. The Motley Fool recommends Otis Worldwide and WM. The Motley Fool has a disclosure policy.
Otis and WeMaintain leadership teams. Pictured left to right is Nora LaFreniere, Executive Vice President & General Counsel, Otis Worldwide Corporation; Judy Marks, Chair, Chief Executive Officer and President, Otis Worldwide Corporation; Jade Francine, Chief Growth Officer, WeMaintain; Benoit Dupont, Chief Executive Officer, WeMaintain.
(PRNewsfoto/Otis Worldwide Corporation) , /PRNewswire/ -- Otis Worldwide Corporation (NYSE: OTIS), the world's leading company for elevator and escalator manufacturing, installation, service and modernization, and WeMaintain today announced that they have closed an agreement under which Otis will acquire a majority stake in WeMaintain, a fast-growing, technology-enabled service company for the elevator and escalator industry. The investment reflects Otis' continued focus on advancing service and service technology to deliver the best possible solutions for customers.
"Service is the foundation of our business, and innovation in how service is delivered is increasingly important as customers seek greater reliability and better visibility into performance," said Judy Marks, Chair, CEO and President, Otis Worldwide Corp. "WeMaintain has built a strong technology platform and agile operating model that reflects how quality service is delivered in a fast-paced, digital and customer centric environment. We are confident in their growth potential and believe this investment supports their continued success while creating long-term value for both organizations."
"Otis' investment allows us to stay focused on what we do best – continuing to build and advance our technology and scale our business as an independent company," said Benoit Dupont, WeMaintain CEO. "With the stability and support of the global industry leader, we are well positioned to strengthen our offering while maintaining the close customer relationships and high standards that have always defined our approach."
Otis and WeMaintain will operate as separate entities, and WeMaintain will continue to offer its agnostic IoT and AI based solution to its current and future customers.
About Otis
Otis gives people freedom to connect and thrive in a taller, faster, smarter world. The global leader in the manufacture, installation, service and modernization of elevators and escalators, we move 2.5 billion people a day and maintain approximately 2.5 million customer units worldwide – the industry's largest Service portfolio. You'll find us in the world's most iconic structures, as well as residential and commercial buildings, transportation hubs and everywhere people are on the move. Headquartered in Connecticut, USA, Otis is 72,000 people strong, including 45,000 field professionals, all committed to manufacturing, installing and maintaining products to meet the diverse needs of our customers and passengers in more than 200 countries and territories. To learn more, visit www.otis.com and follow us on LinkedIn, YouTube, Instagram and Facebook @OtisElevatorCo.
About WeMaintain
WeMaintain was founded in 2017 by Benoit Dupont and Jade Francine on the belief that building maintenance could be smarter, more transparent, and more impactful. We combine AI-driven insights, IoT-powered data, and on-the-ground expertise to deliver real-time visibility, enhanced operational efficiency, and increased asset reliability for building owners and operators.
With operations across Asia and Europe and more than 350 employees, we provide services and solutions for elevators, escalators, automatic doors, and fire safety systems.
Our human + tech approach sets a new standard for service quality, customer experience, and growth.
To learn more, visit www.wemaintain.com and follow us on LinkedIn.
Otis Media Contact:
Katy Padgett
Phone: +1-860-674-3047
Email: [email protected]
WeMaintain Media Contact:
Victoria Pearson
Phone: +44 (0) 7515-557-901
Email: [email protected]
Meets the readiness, scale and reliability demands of today's fast‑growing data center and infrastructure needs Engineered and ready now for facilities that require fast delivery of high capacity and durable elevators available with world-class Otis service, experience and expertise , /PRNewswire/ -- Otis Worldwide Corporation (NYSE: OTIS), the world leader in the manufacture, installation, service and modernization of elevators and escalators, today announced Otis Robust, a new heavy-duty elevator range engineered to meet the growing demand of multi-story data centers and other essential infrastructure, such as airports, hospitals and industrial plants, that operate around the clock under demanding conditions.
Otis Robust elevators are designed for demanding infrastructure supporting heavy loads, frequent use and continuous operation, with up to five times the weight capacity and two times wider door openings than standard passenger elevators. The global demand for larger and more advanced facilities and infrastructure is expanding at an unprecedented rate across sectors, with the global data center pipeline alone exceeding $2.5 trillion* in anticipated investment. Advances in cloud computing and artificial intelligence (AI) are fueling this expansion, driving rapid growth in multi-story data center capacity worldwide. As these facilities scale, with strong market momentum in the United States and Canada and substantial growth potential across Asia and Europe, the Middle East and Africa (EMEA), they must be built and brought online faster, placing new demands on the performance, durability and safety of the infrastructure they support.
"As construction and investment for data centers and other infrastructure accelerates, customers are looking for partners like Otis who can move at pace without compromising on safety and reliability," said Judy Marks, Chair, CEO, and President of Otis. "The Robust elevator range reflects how we are ready to serve these fast-growing sectors, bringing ready-now, heavy-duty solutions to market that are purpose-built for high-intensity environments. By combining industrial grade engineering with our global scale and service expertise, we're helping customers build and deploy facilities faster and operate them with confidence over the long term."
Whether for individual installations or multi-site major projects, Otis leverages its global manufacturing and supply chain network, proven processes and dedicated teams of experts to provide end-to-end support that helps streamline decision making and accelerate every step—from bidding through commissioning—while maintaining consistency and quality.
Otis Robust elevators are designed for demanding infrastructure supporting heavy loads, frequent use and continuous operation, with up to five times the weight capacity and two times wider door openings than standard passenger elevators. They help customers reduce operational risk, protect valuable equipment, and maintain performance time around the clock. Combined with an Otis service plan and the Otis ONE™ IoT predictive maintenance solution, customers should benefit from high service quality and extended performance. They can also easily modernize and upgrade their equipment to scale operations and protect long-term investments as facility needs change over time.
To learn more about the range of Otis Robust heavy-duty elevators and the company's commitment to supporting the rapid development of critical infrastructure, visit www.otis.com/en/us/products/otis-robust.
Q&A
What distinguishes the Otis Robust heavy-duty elevators from other elevator solutions currently available?
The Otis Robust heavy-duty elevators are engineered for multi-story data centers and other critical infrastructure that require accelerated installation of high-capacity, dependable, and continuously operating elevators.
How does Otis move fast from bid to commissioning?
Otis leverages its global manufacturing and supply chain network, proven processes, and dedicated expert teams. Whether it's a single or multiple site deployment, its end-to-end support helps streamline decision making and accelerate every step—from bidding through commissioning—while maintaining consistency and quality.
Why has Otis launched a dedicated elevator range for data centers and mission-critical facilities now?
We are seeing unprecedented expansion across mission-critical infrastructure. Advances in cloud computing and artificial intelligence (AI) are fueling this expansion, driving rapid growth in data center capacity. The global data center pipeline alone now exceeds $2.5 trillion*, and these facilities are becoming larger, more complex and more demanding. Elevators are essential to keeping these dynamic environments running continuously. The Otis Robust elevators were engineered to meet this reality, with reliability and performance designed from the outset.
What problems are customers in data centers and other critical facilities facing today?
Customers tell us that swift delivery, performance and reliability are their top priorities, whether they are moving heavy equipment, regularly moving large numbers of passengers or striving to maintain maximum up time in 24/7 environments. With up to five times the weight capacity and two times wider door openings than standard passenger elevators, Otis Robust elevators are purpose built for heavy loads, frequent use and continuous operation, helping customers reduce operational risk and protect critical operations.
How does Otis Robust support the rapid evolution of data centers' needs?
Otis Robust elevators are purpose built for heavy loads, frequent use and continuous operation and designed for easy modernization and upgrades, allowing customers to adapt their systems as their operational needs change.
About Otis
Otis gives people freedom to connect and thrive in a taller, faster, smarter world. The global leader in the manufacture, installation, service and modernization of elevators and escalators, we move 2.5 billion people a day and maintain approximately 2.5 million customer units worldwide – the industry's largest Service portfolio. You'll find us in the world's most iconic structures, as well as residential and commercial buildings, transportation hubs and everywhere people are on the move. Headquartered in Connecticut, USA, Otis is 72,000 people strong, including 45,000 field professionals, all committed to manufacturing, installing and maintaining products to meet the diverse needs of our customers and passengers in more than 200 countries and territories. To learn more, visit www.otis.com and follow us on LinkedIn, YouTube, Instagram and Facebook @OtisElevatorCo.
*Source: Q1-2026 Global Insights report on data centers issued by GlobalData
Media Contact:
Katy Padgett
Phone: +1-860-674-3047
Email: [email protected]
Wall Street expects flat earnings compared to the year-ago quarter on higher revenues when Otis Worldwide (OTIS - Free Report) reports results for the quarter ended March 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.
The earnings report, which is expected to be released on April 22, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower.
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.
Zacks Consensus EstimateThis company is expected to post quarterly earnings of $0.92 per share in its upcoming report, which represents no change from the year-ago quarter.
Revenues are expected to be $3.51 billion, up 4.7% from the year-ago quarter.
Estimate Revisions TrendThe consensus EPS estimate for the quarter has been revised 1.96% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.
Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change.
Price, Consensus and EPS Surprise
Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction).
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.
Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.
A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.
Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).
How Have the Numbers Shaped Up for Otis Worldwide?For Otis Worldwide, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -2.27%.
On the other hand, the stock currently carries a Zacks Rank of #3.
So, this combination makes it difficult to conclusively predict that Otis Worldwide will beat the consensus EPS estimate.
Does Earnings Surprise History Hold Any Clue?While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.
For the last reported quarter, it was expected that Otis Worldwide would post earnings of $1.03 per share when it actually produced earnings of $1.03, delivering no surprise.
Over the last four quarters, the company has beaten consensus EPS estimates three times.
Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.
That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
Otis Worldwide doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Key Takeaways Otis Q1 EPS estimate cut to $0.92 from $0.95 in 30 days; sales seen at $3.51B, up 4.7% YoY.OTIS Service segment drives growth via maintenance, repair and modernization, with repair nearing 10% growth.OTIS Service segment drives growth via maintenance, repair and modernization, with repair nearing 10% growth. Otis Worldwide Corporation (OTIS - Free Report) is scheduled to report first-quarter 2026 results on April 22, 2026, before the opening bell.
In the last reported quarter, the company’s adjusted earnings came in line with the Zacks Consensus Estimate, but net sales missed the same. Meanwhile, on a year-over-year basis, both top and bottom lines grew 3.3% and 10.8%, respectively.
OTIS’ earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 2.3%.
Trend in Otis’ Estimate RevisionFor the quarter to be reported, the Zacks Consensus Estimate for adjusted earnings per share (EPS) has trended downward to 92 cents from 95 cents in the past 30 days. The estimated figure remains flat year over year.
The consensus mark for net sales is pegged at $3.51 billion, indicating 4.7% growth from the year-ago figure of $3.35 billion.
Key Factors to Note for OTIS’ Q1 EarningsNet SalesOtis’ first-quarter net sales are likely to have increased year over year, supported by robust operational growth in the Service segment (which contributed 65.4% of 2025 net sales). Service organic sales growth is expected to have been supported by solid execution in maintenance and repair, along with steady modernization activity backed by a strong backlog. Repair activity is likely to have shown acceleration, with management expecting growth to move toward 10% or higher, supported by rising demand linked to an aging installed base and improving execution in the field.
Modernization revenues are also expected to have contributed, driven by backlog conversion and sustained demand trends across regions. However, the pace of conversion might vary due to project timing and execution cycles, particularly in larger or multi-year projects.
In contrast, New Equipment sales (which contributed 34.6% of 2025 net sales) are expected to have remained under pressure. The segment is likely to have declined year over year, broadly in line with recent trends, as continued weakness in China offsets growth across other regions. While orders and backlog trends outside China remain supportive, lower volumes and pricing pressure in China are expected to have weighed on overall performance.
Overall, sales growth is expected to have remained modest, with service-driven expansion partially offset by continued softness in New Equipment.
For the first quarter, our model predicts the Service segment’s net sales to increase year over year by 10.2% to $2.41 billion, with the New Equipment segment’s net sales declining 5% to $1.1 billion.
MarginsOn the margin front, service mix is expected to have remained as a key support. Higher service volumes, pricing actions and productivity initiatives are likely to have supported margins, even as continued investments in service excellence and field resources limit near-term expansion.
Repair growth is expected to have supported profitability given its higher-margin nature, while modernization margins have been improving with scale. The mix between repair and modernization might have influenced overall margin performance in the quarter.
New Equipment margins are expected to have remained a headwind due to lower volumes, pricing pressure in China and tariff impacts, with only partial support from productivity and restructuring benefits.
Overall, earnings are expected to remain broadly flat year over year, reflecting steady service-driven support offset by continued pressure in New Equipment and ongoing investments.
We expect the adjusted operating margin in the New Equipment segment to decrease year over year to 5.1% from 5.7%, while the same for the Service segment is anticipated to grow 100 basis points to 25.6%.
Our model predicts adjusted EBITDA during the quarter to be up year over year by 0.8% to $606.5 million, with the adjusted EBITDA margin to contract 70 bps to 17.8%.
What Our Model Unveils for OTISOur 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, which is not the case here.
OTIS’ Earnings ESP: OTIS has an Earnings ESP of -1.01%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank of Otis: Currently, the company carries a Zacks Rank of 3.
Stocks With the Favorable CombinationHere 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.
ATS Corporation (ATS - Free Report) currently has an Earnings ESP of +1.05% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 9.7%. In the to-be-reported quarter, ATS Corporation’s earnings are expected to register a 14.3% year-over-year increase.
Deere & Company (DE - Free Report) currently has an Earnings ESP of +6.24% and a Zacks Rank of 3.
The company’s earnings beat estimates in three of the last four quarters and missed on the remaining one occasion, the average surprise being 11.3%. In the to-be-reported quarter, Deere’s earnings are expected to register a 12.7% year-over-year decrease.
Kennametal (KMT - Free Report) currently has an Earnings ESP of +5.88% and a Zacks Rank of 1.
The company’s earnings beat estimates in three of the last four quarters and missed on the remaining one occasion, the average surprise being 35.4%. In the to-be-reported quarter, Kennametal’s earnings are expected to register a 44.7% year-over-year increase.
, /PRNewswire/ -- The Otis Worldwide Corporation (NYSE: OTIS) Board of Directors today declared a quarterly dividend of $0.44 per share of Otis' common stock, representing a 5% increase. The dividend will be payable on June 12, 2026, to shareholders of record at the close of business on May 15, 2026.
"With the continued strength of our Service driven business and the cash flows it generates, this dividend increase underscores our disciplined approach to capital allocation," said Judy Marks, Otis Chair, CEO and President. "Our dividend has increased approximately 120% since our spin in 2020, reflecting our focus on delivering attractive and sustainable returns to shareholders."
About Otis
Otis gives people freedom to connect and thrive in a taller, faster, smarter world. The global leader in the manufacture, installation, service and modernization of elevators and escalators, we move 2.5 billion people a day and maintain approximately 2.5 million customer units worldwide – the industry's largest Service portfolio. You'll find us in the world's most iconic structures, as well as residential and commercial buildings, transportation hubs and everywhere people are on the move. Headquartered in Connecticut, USA, Otis is 72,000 people strong, including 45,000 field professionals, all committed to manufacturing, installing and maintaining products to meet the diverse needs of our customers and passengers in more than 200 countries and territories. To learn more, visit www.otis.com and follow us on LinkedIn, YouTube, Instagram and Facebook @OtisElevatorCo.
Cautionary Statement
This release includes statements related to anticipated earnings, cash flow and dividends that constitute "forward-looking statements" under the securities laws. All forward-looking statements involve risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Past dividends provide no assurance as to future dividends. The payment and amount of future dividends could vary significantly from past amounts due to a number of risks and uncertainties. Risks and uncertainties include: (1) the effect of economic conditions in the industries and markets in which Otis and its businesses operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, future availability of credit and factors that may affect such availability or costs (including tighter credit conditions), levels of end market demand in construction, pandemic health issues, natural disasters and the financial condition of Otis' customers and suppliers; (2) risks associated with indebtedness; (3) challenges in the development and production of new products and services; and (4) the effect of changes in laws and regulations, political conditions and geopolitical conflicts in countries in which we operate and other factors beyond our control. The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary from those stated in forward-looking statements, see the reports of Otis on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Any forward-looking statement speaks only as of the date on which it is made, and Otis assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
Otis delivers net sales growth of 6%, driven by Service with growth in all lines of business, led by repair
Net sales up 6% and organic sales up 1%, driven by Service net sales up 11% with organic sales up 5% Repair net sales up 16% with organic repair sales up approximately 10% Modernization orders up 11% at constant currency, backlog up 32%, 30% at constant currency New Equipment orders up 1% at constant currency, backlog up 6%, 3% at constant currency Operating cash flow of $413 million; adjusted free cash flow of $272 million Share repurchases of approximately $400 million , /PRNewswire/ -- Otis Worldwide Corporation (NYSE:OTIS) reported first quarter 2026 net sales of $3.6 billion with organic sales up 1% versus the prior year. GAAP earnings per share (EPS) increased 43% to $0.87 and adjusted EPS decreased 3% to $0.89.
"Otis delivered a solid quarter, with net sales up 6%. All Service lines of business grew, led by repair which grew 16% at actual currency and 10% organically. Orders and backlog strengthened: modernization orders were up 11% and backlog was up 30% at constant currency. New Equipment orders grew 1% and backlog grew 3% at constant currency. Otis delivered operating cash flow of $413 million and adjusted free cash flow of $272 million, up significantly from a year ago," said Chair, CEO & President Judy Marks. "This performance allowed Otis to repurchase approximately $400 million of shares while also announcing an exciting majority investment in WeMaintain, a digitally native and AI enabled elevator service provider."
Judy Marks continued, "While underlying demand remains solid as reflected in our order activity, we faced near‑term pressures, reflected in our Service margins, from cost headwinds and investments in growth. We are taking decisive actions focused on operational execution, pricing, and cost efficiency to address these pressures, while continuing our disciplined capital allocation to drive long‑term shareholder value. The combination of our increasing backlog, pricing actions, and disciplined execution give us confidence in growing momentum into the second quarter and remainder of the year."
Key Figures
Quarter Ended March 31,
(dollars in millions, except per share amounts)
2026
2025
Y/Y
Y/Y (CFX)
Net sales
$ 3,566
$ 3,350
6 %
1 %
Organic sales growth
1 %
GAAP
Operating profit
$ 539
$ 411
$ 128
Operating profit margin
15.1 %
12.3 %
280 bps
Net income
$ 340
$ 243
40 %
Earnings per share
$ 0.87
$ 0.61
43 %
Adjusted non-GAAP comparison
Operating profit
$ 550
$ 560
$ (10)
$ (38)
Operating profit margin
15.4 %
16.7 %
(130) bps
Net income
$ 347
$ 368
(6) %
Earnings per share
$ 0.89
$ 0.92
(3) %
First quarter net sales of $3.6 billion increased 6% versus the prior year, driven primarily by Service sales with growth in all lines of business, partially offset by a decrease in New Equipment sales in China and Asia Pacific.
First quarter GAAP operating profit of $539 million increased $128 million driven primarily by a favorable comparison due to UpLift transformation costs, separation-related adjustments, and other non-recurring items in the prior year. Adjusted operating profit of $550 million decreased $10 million at actual currency and $38 million at constant currency, driven by declines in both segments. GAAP operating profit margin expanded 280 basis points to 15.1% and adjusted operating profit margin of 15.4% declined 130 basis points versus the prior year driven by unfavorable segment performance partially offset by segment mix. The performance was impacted by an unfavorable year‑over‑year comparison due to tariff impacts versus the prior year, continued Service investments that began in the second quarter of last year and accelerated this year to support strong repair and modernization order momentum, and shipment delays in New Equipment and modernization related to the geopolitical situation in the Middle East.
GAAP EPS of $0.87 increased 43% compared to the prior year primarily driven by a favorable comparison due to UpLift transformation costs, separation-related adjustments, and other non-recurring items in the prior year. Adjusted EPS of $0.89 decreased 3% driven by operational performance, higher interest, and higher taxes, partially offset by favorable foreign exchange rates and a lower share count.
Service
Quarter Ended March 31,
(dollars in millions)
2026
2025
Y/Y
Y/Y (CFX)
Net sales
$ 2,417
$ 2,187
11 %
6 %
Organic sales
5 %
Segment operating profit
$ 556
$ 537
$ 19
$ (10)
Segment operating profit margin
23.0 %
24.6 %
(160) bps
In the first quarter, net sales of $2.4 billion increased 11%, with a 5% increase in organic sales. Organic maintenance and repair sales increased 4% and organic modernization sales increased 6%.
Segment operating profit of $556 million increased $19 million at actual currency and decreased $10 million at constant currency due to higher volume and favorable pricing being more than offset by higher labor and material cost, investments, and mix. Segment operating profit margin contracted 160 basis points to 23.0%.
New Equipment
Quarter Ended March 31,
(dollars in millions)
2026
2025
Y/Y
Y/Y (CFX)
Net sales
$ 1,149
$ 1,163
(1) %
(5) %
Organic sales
(5) %
Segment operating profit
$ 38
$ 66
$ (28)
$ (27)
Segment operating profit margin
3.3 %
5.7 %
(240) bps
In the first quarter, net sales of $1.1 billion decreased 1% versus the prior year, with low single digit organic sales growth in EMEA more than offset by a greater than 20% decline in China, a mid-single digit decline in Asia Pacific, and a low single digit decline in the Americas.
Segment operating profit of $38 million decreased $28 million at actual currency and $27 million at constant currency from the impacts of lower volume, unfavorable price, and mix, partially offset by productivity. Segment operating profit margin contracted 240 basis points to 3.3%.
New Equipment orders were up 1% at constant currency with a greater than 20% growth in the Americas, and a low single digit growth in EMEA, partially offset by a greater than 20% decline in Asia Pacific, and a low teens decline in China. New Equipment backlog increased 6% at actual currency and 3% at constant currency.
Cash flow
Quarter Ended March 31,
(dollars in millions)
2026
2025
Y/Y
Cash flow from operations
$ 413
$ 190
$ 223
Free cash flow
$ 380
$ 156
$ 224
Adjusted free cash flow
$ 272
$ 186
$ 86
First quarter cash flow changes were driven by an increase in net income and changes in working capital.
2026 Outlook1
Otis is revising our full year outlook:
Net sales of $15.1 to $15.3 billion Organic sales up low to mid-single digits Organic New Equipment sales down low single digits to flat Organic Service sales up mid to high single digits Adjusted operating profit of approximately $2.5 billion, up $20 to $60 million at constant currency; up $60 to $100 million at actual currency Adjusted EPS of $4.20 to $4.24 Adjusted free cash flow of $1.60 to 1.65 billion 1 Note: When we provide outlook for organic sales, adjusted operating profit, adjusted EPS, adjusted effective tax rate and adjusted free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See "Use and Definitions of Non-GAAP Financial Measures" below for additional information.
About Otis
Otis is the world's leading elevator and escalator manufacturing, installation, service and modernization company. We move 2.5 billion people a day and maintain approximately 2.5 million customer units worldwide, the industry's largest Service portfolio. Headquartered in Connecticut, USA, Otis is 72,000 people strong, including 45,000 field professionals, all committed to manufacturing, installing and maintaining products to meet the diverse needs of our customers and passengers in more than 200 countries and territories worldwide. For more information, visit www.otis.com and follow us on LinkedIn, YouTube, Instagram and Facebook @OtisElevatorCo.
Use and Definitions of Non-GAAP Financial Measures
Otis Worldwide Corporation ("Otis") reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. A reconciliation of the non-GAAP measures (referenced in this press release) to the corresponding amounts prepared in accordance with GAAP appears in the attached tables. These tables provide additional information as to the items and amounts that have been excluded from the adjusted measures. Below are our non-GAAP financial measures:
Non-GAAP measure
Definition
Organic sales
Represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items of a non-recurring and/or nonoperational nature ("other significant items"). Management believes organic sales is a useful measure in providing period-to-period comparisons of the results of the Company's ongoing operational performance.
Adjusted selling, general and
administrative ("SG&A") expense
Represents SG&A expense (a GAAP measure), excluding restructuring costs and other significant items.
Adjusted operating profit
Represents income from continuing operations (a GAAP measure), excluding restructuring costs and other significant items.
Adjusted net interest expense
Represents net interest expense (a GAAP measure), adjusted for the impacts of non-recurring acquisition related financing costs and related net interest expense pending the completion of a transaction and other significant items.
Adjusted noncontrolling interest in
earnings
Represents noncontrolling interest in earnings (a GAAP measure), excluding restructuring costs and other significant items, including related tax effects.
Adjusted net income
Represents net income attributable to Otis Worldwide Corporation (a GAAP measure), excluding restructuring costs and other significant items, including related tax effects.
Adjusted earnings per share ("EPS")
Represents diluted earnings per share attributable to common shareholders (a GAAP measure), adjusted for the per share impact of restructuring and other significant items, including related tax effects.
Adjusted effective tax rate
Represents the effective tax rate (a GAAP measure) adjusted for other significant items and the tax impact of restructuring costs and other significant items.
Constant currency
GAAP financial results include the impact of changes in foreign currency exchange rates ("AFX"). We use the non-GAAP measure "at constant currency" or "CFX" to show changes in our financial results without giving effect to period-to-period currency fluctuations. Under U.S. GAAP, income statement results are translated in U.S. dollars at the average exchange rate for the period presented. Management believes that this non-GAAP measure is useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance.
Free cash flow
Represents cash flow from operations (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing Otis' ability to fund its activities, including the financing of acquisitions, debt service, repurchases of common stock and distribution of earnings to shareholders. Free cash flow should not be considered an alternative to, or more meaningful than, net cash flows provided by operating activities, or any other measure of liquidity presented in accordance with GAAP.
Adjusted free cash flow
Represents cash flow from operations (a GAAP measure) less capital expenditures, adjusted to exclude certain items management believes affect the comparability of operating results. Management believes adjusted free cash flow is a useful measure of liquidity that provides investors additional information regarding the Company's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of common stock and distribution of earnings to shareholders. Adjusted free cash flow should not be considered an alternative to, or more meaningful than, net cash flows provided by operating activities, or any other measure of liquidity presented in accordance with GAAP.
Management believes that organic sales, adjusted SG&A expense, adjusted operating profit, adjusted net interest expense, adjusted noncontrolling interest in earnings, adjusted net income, adjusted EPS and the adjusted effective tax rate are useful measures in providing period-to-period comparisons of the results of the Company's ongoing operational performance.
When we provide our expectations for adjusted net sales, organic sales, adjusted operating profit, adjusted net interest expense, adjusted noncontrolling interest in earnings, adjusted net income, adjusted effective tax rate, adjusted EPS, free cash flow and adjusted free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected diluted EPS from continuing operations, operating profit, the effective tax rate, net sales and expected cash flow from operations) generally is not available without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.
Cautionary Statement
This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management's current expectations or plans for Otis' future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "medium-term," "near-term," "confident," "goals" and other words of similar meaning in connection with a discussion of future operating or financial performance. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, dividends, share repurchases, tax rates, research & development spend, restructuring or transformation actions (including UpLift and related reorganization and outsourcing activities and such actions with respect to our business in China), credit ratings, net indebtedness and other measures of financial performance or potential future plans, strategies or transactions, or statements that relate to climate change and our intent to achieve certain sustainability targets or other corporate responsibility initiatives, including operational impacts and costs associated therewith, and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, Otis claims the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which Otis and its businesses operate and any changes therein, including financial market conditions, fluctuations in commodity prices and other inflationary pressures, interest rates and foreign currency exchange rates, levels of end market demand in construction, pandemic health issues, natural disasters, whether as a result of climate change or otherwise, and the financial condition of Otis' customers and suppliers; (2) the effect of changes in political conditions in the U.S. and in other countries in which Otis and its businesses operate, including tensions between the U.S. and China and geopolitical conflicts, including the ongoing conflicts and instability in the Middle East and the conflict between Russia and Ukraine on general market conditions, commodity costs, global trade policies and related sanctions, export controls and tariffs, and currency exchange rates in the near term and beyond; (3) challenges in the development, production, delivery, support, employee adoption, performance and realization of the anticipated benefits of advanced technologies and new products and services; (4) future levels of indebtedness, capital spending and research and development spending; (5) future availability of credit and factors that may affect such availability or costs thereof, including credit market conditions and Otis' capital structure; (6) the timing and scope of future repurchases of Otis' common stock, which may be suspended at any time due to various factors, including market conditions and the level of other investing activities and uses of cash; (7) fluctuations in prices and delays and disruptions in delivery of materials and services from suppliers, whether as a result of changes in general economic conditions, geopolitical conflicts or otherwise; (8) cost reduction or containment actions, restructuring or transformation costs and related savings and other consequences thereof, including with respect to UpLift and our China business and related impacts of reorganization, change management and outsourcing activities, as applicable; (9) new business and investment opportunities and the realization of anticipated benefits, including meeting customer expectations and maintaining our competitiveness; (10) the outcome of legal proceedings, investigations and other contingencies; (11) pension plan assumptions and future contributions; (12) the impact of the negotiation of collective bargaining agreements and labor disputes, labor actions, including strikes or work stoppages, and labor inflation in the markets in which Otis and its businesses operate globally; (13) the effect of changes in laws, regulations and enforcement priorities in the U.S. and other countries in which Otis and its businesses operate; (14) the ability of Otis to retain and hire key personnel; (15) the scope, nature, impact or timing of acquisition and divestiture activity, the integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs; (16) the determination by the Internal Revenue Service (the "IRS") and other tax authorities that the distribution or certain related transactions should be treated as taxable transactions in connection with the separation (the "Separation") of Otis and Carrier Global Corporation ("Carrier") from United Technologies Corporation (now known as RTX Corporation ("RTX"); and (17) our obligations and disputes that have or may hereafter arise under the agreements we entered into with RTX and Carrier in connection with the Separation. The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary from those stated in forward-looking statements, see Otis' registration statement on Form 10 and the reports of Otis on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Any forward-looking statement speaks only as of the date on which it is made, and Otis assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
Otis Worldwide Corporation
Condensed Consolidated Statements of Operations
Quarter Ended March 31,
(Unaudited)
(dollars in millions, except per share amounts; shares in millions)
2026
2025
Net Sales
$ 3,566
$ 3,350
Costs and Expenses:
Cost of products and services sold
2,484
2,349
Research and development
38
37
Selling, general and administrative
510
464
Total Costs and Expenses
3,032
2,850
Other income (expense), net
5
(89)
Operating profit
539
411
Non-service pension cost (benefit)
—
—
Interest expense (income), net
59
45
Net income before income taxes
480
366
Income tax expense (benefit)
127
110
Net income
353
256
Less: Noncontrolling interest in subsidiaries' earnings
13
13
Net income attributable to Otis Worldwide Corporation
$ 340
$ 243
Earnings Per Share of Common Stock:
Basic
$ 0.88
$ 0.61
Diluted
$ 0.87
$ 0.61
Weighted Average Number of Shares Outstanding:
Basic shares
388.1
396.6
Diluted Shares
389.6
399.1
Otis Worldwide Corporation
Reconciliation of Reported (GAAP) to Adjusted Operating Profit & Operating Profit Margin
Quarter Ended March 31,
(Unaudited)
(dollars in millions)
2026
2025
Net Sales
New Equipment
$ 1,149
$ 1,163
Service
2,417
2,187
Total Net Sales
$ 3,566
$ 3,350
Operating Profit
New Equipment
$ 38
$ 66
Service
556
537
Total segment operating profit
594
603
Corporate and Unallocated
(55)
(192)
Total Otis GAAP Operating Profit
539
411
UpLift restructuring
—
20
Other restructuring
7
23
UpLift transformation costs
—
23
Separation-related adjustments 1
5
52
Litigation-related settlement costs 2
—
21
Held for sale impairment
—
10
Other, net
(1)
—
Total Otis Adjusted Operating Profit
$ 550
$ 560
Reported Total Operating Profit Margin
15.1 %
12.3 %
Adjusted Total Operating Profit Margin
15.4 %
16.7 %
1 Separation-related adjustments in the quarters ended March 31, 2026 and 2025 represent estimated amounts due to RTX Corporation
(our former parent) in accordance with the Tax Matters Agreement, including those amounts related to a favorable ruling received in
August 2024 regarding a tax litigation in Germany.
2 Litigation-related settlement costs in the quarter ended March 31, 2025 represent the aggregate amount of settlement costs and
increase in loss contingency accruals, excluding legal costs, for certain legal matters that are outside of the ordinary course of business
due to the size, complexity and/or unique facts of these matters.
Otis Worldwide Corporation
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Net Income, Earnings Per Share, and Effective Tax Rate
Quarter Ended March 31,
(Unaudited)
(dollars in millions, except per share amounts)
2026
2025
Adjusted Operating Profit
$ 550
$ 560
Adjusted net interest expense 1
59
46
Adjusted income from operations before income taxes
491
514
Income tax expense (benefit)
127
110
Tax impact on restructuring and non-recurring items
4
21
Adjusted net income from operations
360
383
Adjusted noncontrolling interest 2
13
15
Adjusted net income attributable to common shareholders
$ 347
$ 368
GAAP net income attributable to common shareholders
$ 340
$ 243
UpLift restructuring
—
20
Other restructuring
7
23
UpLift transformation costs
—
23
Separation-related adjustments
5
52
Litigation-related settlement costs
—
21
Held for sale impairment
—
10
Interest income related to non-recurring tax items 1
—
(1)
Tax effects of restructuring, non-recurring items and other adjustments
(4)
(21)
Other, net 2
(1)
(2)
Adjusted net income attributable to common shareholders
$ 347
$ 368
Diluted Earnings Per Share
$ 0.87
$ 0.61
Impact to diluted earnings per share
0.02
0.31
Adjusted Earnings Per Share
$ 0.89
$ 0.92
Effective Tax Rate
26.5 %
30.1 %
Impact of adjustments on effective tax rate
0.2 %
(4.5) %
Adjusted Effective Tax Rate
26.7 %
25.6 %
1 In August 2024, we received a favorable ruling regarding a tax litigation in Germany. As a result, income tax benefits and related interest
income were recorded in 2024. Net interest expense is reflected as adjusted without $1 million of interest income for quarter ended March
31, 2025.
2 Noncontrolling interest is reflected as adjusted without $2 million of the noncontrolling interest share of Other restructuring for the quarter
ended March 31, 2025.
Otis Worldwide Corporation
Components of Changes in Net Sales
Quarter Ended March 31, 2026 Compared with Quarter Ended March 31, 2025
Factors Contributing to Total % Change in Net Sales
Organic
FX
Translation
Acquisitions /
Divestitures,
net and Other
Total
New Equipment
(5) %
4 %
— %
(1) %
Service
5 %
5 %
1 %
11 %
Maintenance and Repair
4 %
5 %
2 %
11 %
Modernization
6 %
3 %
1 %
10 %
Total Net Sales
1 %
5 %
— %
6 %
Components of Changes in New Equipment Backlog
March 31, 2026
Y/Y Growth %
New Equipment Backlog increase at actual currency
6 %
Foreign exchange impact to New Equipment Backlog
(3) %
New Equipment Backlog increase at constant currency
3 %
Components of Changes in Modernization Backlog
March 31, 2026
Y/Y Growth %
Modernization Backlog increase at actual currency
32 %
Foreign exchange impact to Modernization Backlog
(2) %
Modernization Backlog increase at constant currency
30 %
Otis Worldwide Corporation
Reconciliation of Segment and Total Adjusted Operating Profit at Constant Currency
Quarter Ended March 31, 2026 Compared with Quarter Ended March 31, 2025
(dollars in millions)
2026
2025
Y/Y
New Equipment
Segment Operating Profit
$ 38
$ 66
$ (28)
Impact of foreign exchange
1
—
1
Segment Operating Profit at constant currency
$ 39
$ 66
$ (27)
Service
Segment Operating Profit
$ 556
$ 537
$ 19
Impact of foreign exchange
(29)
—
(29)
Segment Operating Profit at constant currency
$ 527
$ 537
$ (10)
Otis Consolidated
Adjusted Operating Profit
$ 550
$ 560
$ (10)
Impact of foreign exchange
(28)
—
(28)
Adjusted Operating Profit at constant currency
$ 522
$ 560
$ (38)
Otis Worldwide Corporation
Condensed Consolidated Balance Sheet
March 31, 2026
December 31, 2025
(dollars in millions)
(Unaudited)
Assets
Cash and cash equivalents
$ 834
$ 1,096
Accounts receivable, net
3,920
3,688
Contract assets
751
699
Inventories
669
613
Other current assets
290
405
Total Current Assets
6,464
6,501
Future income tax benefits
400
407
Fixed assets, net
744
743
Operating lease right-of-use assets
552
554
Intangible assets, net
333
343
Goodwill
1,682
1,695
Other assets
367
410
Total Assets
$ 10,542
$ 10,653
Liabilities and Equity (Deficit)
Short-term borrowings and current portion of long-term debt
$ 939
$ 1,056
Accounts payable
1,975
2,142
Accrued liabilities
1,710
1,847
Contract liabilities
3,100
2,611
Total Current Liabilities
7,724
7,656
Long-term debt
6,879
6,900
Future pension and postretirement benefit obligations
416
419
Operating lease liabilities
400
397
Future income tax obligations
225
223
Other long-term liabilities
333
329
Total Liabilities
15,977
15,924
Redeemable noncontrolling interest
74
75
Shareholders' Equity (Deficit):
Common Stock and additional paid-in capital
332
333
Treasury Stock
(4,601)
(4,198)
Accumulated deficit
(378)
(440)
Accumulated other comprehensive income (loss)
(1,033)
(1,087)
Total Shareholders' Equity (Deficit)
(5,680)
(5,392)
Noncontrolling interest
171
46
Total Equity (Deficit)
(5,509)
(5,346)
Total Liabilities and Equity (Deficit)
$ 10,542
$ 10,653
Otis Worldwide Corporation
Condensed Consolidated Statement of Cash Flows
Quarter Ended
March 31,
(Unaudited)
(dollars in millions)
2026
2025
Operating Activities:
Net income from operations
$ 353
$ 256
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization
41
42
Deferred income tax expense (benefit)
4
—
Stock compensation cost
19
21
Change in:
Accounts receivable, net
(229)
(104)
Contract assets and liabilities, current
432
260
Inventories
(58)
(18)
Other current assets
137
(2)
Accounts payable
(176)
(281)
Accrued liabilities
(117)
12
Pension contributions
(11)
(18)
Other operating activities, net
18
22
Net cash flows provided by (used in) operating activities
413
190
Investing Activities:
Capital expenditures
(33)
(34)
Acquisitions of businesses and intangible assets, net of cash
(3)
(36)
Other investing activities, net
51
(91)
Net cash flows provided by (used in) investing activities
15
(161)
Financing Activities:
Increase (decrease) in short-term borrowings, net
29
(11)
Repayment of long-term debt
(135)
—
Dividends paid on Common Stock
(163)
(155)
Repurchases of Common Stock
(400)
(253)
Dividends paid to noncontrolling interest
(3)
(2)
Acquisition of noncontrolling interest shares
(10)
—
Other financing activities, net
(12)
(7)
Net cash flows provided by (used in) financing activities
(694)
(428)
Summary of Activity:
Net cash provided by (used in) operating activities
413
190
Net cash provided by (used in) investing activities
15
(161)
Net cash provided by (used in) financing activities
(694)
(428)
Effect of exchange rate changes on cash and cash equivalents
5
7
Net increase (decrease) in cash, cash equivalents and restricted cash
(261)
(392)
Cash, cash equivalents and restricted cash, beginning of period
1,105
2,321
Cash, cash equivalents and restricted cash, end of period
844
1,929
Less: Restricted cash
10
11
Cash and cash equivalents, end of period
$ 834
$ 1,918
Otis Worldwide Corporation
Adjusted Free Cash Flow Reconciliation
Quarter Ended March 31,
(Unaudited)
(dollars in millions)
2026
2025
Net cash flows provided by operating activities (GAAP)
$ 413
$ 190
Capital expenditures
(33)
(34)
Free cash flow (Non-GAAP)
380
156
Adjustments for:
UpLift restructuring payments
8
11
UpLift transformation payments
4
19
Separation-related payments 1
6
—
German Tax Litigation refunds 2
(126)
—
Adjusted free cash flow (Non-GAAP)
$ 272
$ 186
1 These represent payments to RTX Corporation (our former parent) in accordance with the Tax Matters Agreement.
2 In August 2024, we received a favorable ruling regarding a tax litigation in Germany. The Company has started to
receive refunds and anticipates the refund process to continue through 2026.
Otis Worldwide (OTIS - Free Report) came out with quarterly earnings of $0.89 per share, missing the Zacks Consensus Estimate of $0.91 per share. This compares to earnings of $0.92 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of -2.00%. A quarter ago, it was expected that this company would post earnings of $1.03 per share when it actually produced earnings of $1.03, delivering no surprise.
Over the last four quarters, the company has surpassed consensus EPS estimates two times.
Otis Worldwide, which belongs to the Zacks Manufacturing - General Industrial industry, posted revenues of $3.57 billion for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 1.99%. This compares to year-ago revenues of $3.35 billion. The company has topped consensus revenue estimates two times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Otis Worldwide shares have lost about 9.7% since the beginning of the year versus the S&P 500's gain of 3.2%.
What's Next for Otis Worldwide?While Otis Worldwide has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Otis Worldwide was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.04 on $3.74 billion in revenues for the coming quarter and $4.21 on $15.01 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Manufacturing - General Industrial is currently in the bottom 33% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Another stock from the same industry, DNOW (DNOW - Free Report) , has yet to report results for the quarter ended March 2026.
This energy and industrial distribution company is expected to post quarterly earnings of $0.05 per share in its upcoming report, which represents a year-over-year change of -77.3%. The consensus EPS estimate for the quarter has been revised 10% lower over the last 30 days to the current level.
DNOW's revenues are expected to be $1.13 billion, up 88.7% from the year-ago quarter.
Otis Worldwide (OTIS - Free Report) reported $3.57 billion in revenue for the quarter ended March 2026, representing a year-over-year increase of 6.5%. EPS of $0.89 for the same period compares to $0.92 a year ago.
The reported revenue compares to the Zacks Consensus Estimate of $3.5 billion, representing a surprise of +1.99%. The company delivered an EPS surprise of -2%, with the consensus EPS estimate being $0.91.
While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.
As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.
Here is how Otis Worldwide performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:
Net Sales- Service: $2.42 billion versus the three-analyst average estimate of $2.38 billion. The reported number represents a year-over-year change of +10.5%.Net Sales- New Equipment: $1.15 billion versus $1.1 billion estimated by three analysts on average. Compared to the year-ago quarter, this number represents a -1.2% change.Segment Operating Profit- New Equipment: $38 million compared to the $41.09 million average estimate based on three analysts.Segment Operating Profit- Service: $556 million versus $586.18 million estimated by three analysts on average.Operating Profit- General corporate expenses and other: $-55 million versus $-91.1 million estimated by two analysts on average.View all Key Company Metrics for Otis Worldwide here>>>
Shares of Otis Worldwide have returned +1.1% over the past month versus the Zacks S&P 500 composite's +8.6% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term.
Key Takeaways Otis Worldwide's Q1 Service grew broadly, led by repairs, while modernization orders and backlog improved.Otis Worldwide said healthy modernization orders and a growing backlog boost visibility into future revenues.Otis Worldwide said tariffs, Service investments and Mideast delays pressured margins, trimming earnings. Otis Worldwide Corporation (OTIS - Free Report) reported mixed first-quarter 2026 results, wherein earnings missed the Zacks Consensus Estimate and declined year over year. Meanwhile, net sales surpassed the same and increased from the prior year's reported figure.
Otis Worldwide’s first-quarter results reflected broad-based momentum in Service, led by repair activity, alongside solid order and backlog improvement in the modernization business. The company has emphasized actions around operational execution, pricing and cost efficiency as it works to monetize investments and improve margin performance in the coming quarters.
However, management attributed the margin pressure to tariff impacts relative to the prior year, continued Service investments that began in the second quarter of last year and accelerated this year, and shipment delays tied to geopolitical disruption in the Middle East.
Inside OTIS’ Q1 HeadlinesOTIS reported earnings per share (EPS) of 89 cents, missing the Zacks Consensus Estimate of 91 cents by 2.2%. In the year-ago quarter, it had reported an adjusted EPS of 92 cents.
Net sales of $3.57 billion surpassed the consensus mark of $3.5 billion by 2% and increased 6.4% on a year-over-year basis. Organically, net sales were up 1% year over year. Favorable foreign exchange movement supported sales growth by 5%. A standout in the quarter was repair, with net sales up 16% at actual currency and organic repair sales up about 10%.
Adjusted operating margin contracted 130 basis points year over year to 15.4%, reflecting weaker segment performance, partially offset by a favorable segment mix. Our model predicted the adjusted operating margin to decrease 70 bps (basis points) year over year to 16%.
Segment Details of OTISService: The net sales of this segment increased 11% year over year to $2.42 billion. A 5% rise in organic sales was accompanied by a 5% favorable foreign exchange movement. Organic maintenance and repair sales increased 4%, and organic modernization sales rose 6% from the year-ago quarter. Our model estimated organic sales for the segment to grow 10.2%. The Modernization backlog at constant currency increased 30% year over year.
Segment operating margin contracted 160 bps year over year to 23% due to higher volume and favorable pricing, which were more than offset by higher labor and material costs, investments and mix effects.
New Equipment: This segment’s net sales of $1.15 billion fell 1% from the prior-year period. Organic sales declined 5%. Our model predicted organic sales for the New Equipment segment to decrease 5%.
New Equipment orders rose 1% at constant currency, with more than 20% strength in the Americas and low single-digit growth in EMEA, partially offset by more than 20% decline in the Asia Pacific and a low teens decline in China. The segment’s backlog increased 6% at actual currency and 3% at constant currency, providing some support for future revenue conversion despite near-term delivery challenges.
Segment operating margin contracted 240 bps year over year to 3.3%. The downtrend was due to the impacts of lower volume, unfavorable price, and mix, which was partially offset by productivity tailwinds.
Financial Position of OTISOtis Worldwide had cash and cash equivalents of $834 million as of March 31, 2026, down from $1.1 billion reported at 2025-end. Long-term debt decreased to $6.88 billion as of March 31, 2026, from $6.9 billion at the end of 2025.
Net cash flows provided by operating activities were $413 million as of March 31, 2026, up from $190 million a year ago.
Adjusted free cash flow (FCF) totaled $272 million as of March 31, 2026, up from $186 million a year ago.
OTIS Revises 2026 GuidanceThe company expects net sales in the range of $15.1-$15.3 billion (up from the prior outlook of $15-$15.3 billion), implying approximately 4.6%-6% year-over-year growth. Organic sales growth is still projected in the low- to mid-single-digit range.
Organic New Equipment sales are now expected to range from low single digits to flat (previously projected as flat to low single digits), while Organic Service sales are still anticipated to grow in the mid- to high-single-digit range.
Adjusted operating profit is projected at $2.5 billion (down from the prior range of $2.5-$2.6 billion), now reflecting an increase of $20-$60 million at constant currency and $60-$100 million at actual currency.
Adjusted earnings are forecast at $4.20-$4.24 per share, while adjusted free cash flow is expected to be between $1.6 billion and $1.65 billion (compared with the earlier outlook of $1.6-$1.7 billion).
OTIS' Zacks Rank & Key PicksOtis Worldwide currently carries a Zacks Rank #4 (Sell).
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DXP Enterprises, Inc. (DXPE - Free Report) flaunts a Zacks Rank #1 (Strong Buy) at present. The company delivered a trailing four-quarter earnings surprise of 22.6%, on average. DXPE stock has climbed 37% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for DXP Enterprise’s fiscal 2026 sales and EPS indicates growth of 10.1% and 14.4%, respectively, from the prior-year levels.
Astec Industries, Inc. (ASTE - Free Report) flaunts a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 23.8%, on average. ASTE stock has gained 19.2% in the past six months.
The Zacks Consensus Estimate for Astec’s 2026 sales and EPS indicates growth of 13% and 13.5%, respectively, from the prior-year levels.
Alcoa Corporation (AA - Free Report) presently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 67.3%, on average. AA stock has jumped 64.2% in the past six months.
The Zacks Consensus Estimate for Alcoa’s 2026 sales and EPS indicates growth of 17.6% and 103.2%, respectively, from the year-ago period’s levels.
Otis Worldwide Corp (OTIS) Q1 2026 Earnings Call Highlights: Strong Service Growth and Strategic Capital Deployment Amidst Challenges Otis Worldwide Corp (OTIS) reports robust service growth and significant share repurchases, while navigating new equipment sales declines and geopolitical impacts.
Total Organic Sales Growth: Increased 1% in the quarter.Organic Service Growth: Increased 5% with broad-based strength across all service lines.Maintenance and Repair Sales: Increased 4%, with organic repair sales up approximately 10%.Modernization Orders: Increased 11% in the quarter; backlog up 30% at constant currency.New Equipment Orders: Increased 1% at constant currency; 5% excluding China.Adjusted Free Cash Flow: Approximately $272 million, up 46% versus the prior year.Share Repurchases: Approximately $400 million completed in the quarter.Net Sales: $3.6 billion with organic sales up 1%.Adjusted Operating Profit Margin: Declined 130 basis points to 15.4%.Adjusted EPS: Declined 3% or $0.03 in the quarter.Service Operating Profit: $556 million, down $10 million at constant currency.Service Operating Margin: Contracted 160 basis points to 23%.New Equipment Organic Sales: Declined 5% in the quarter.New Equipment Operating Profit: $38 million, declined $27 million at constant currency.New Equipment Operating Margin: Declined 240 basis points to 3.3%.2026 Financial Outlook - Net Sales: Expected to be $15.1 billion to $15.3 billion.2026 Financial Outlook - Adjusted Operating Profit: Expected to be approximately $2.5 billion.2026 Financial Outlook - Adjusted EPS: Expected to be $4.20 to $4.24.2026 Financial Outlook - Adjusted Free Cash Flow: Anticipated to be between $1.6 billion to $1.65 billion.Release Date: April 22, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points Otis Worldwide Corp OTIS reported a 1% increase in total organic sales for the first quarter of 2026, driven by a 5% growth in the service segment.The company saw a significant 11% increase in modernization orders, with a 30% increase in backlog at constant currency, indicating strong future demand.Adjusted free cash flow improved by 46% year-over-year to approximately $272 million, reflecting better working capital management and cash conversion.Otis Worldwide Corp (OTIS) announced a 5% increase in its quarterly dividend, marking a 120% increase since its spin-off, demonstrating a commitment to returning cash to shareholders.The company completed $400 million in share repurchases during the quarter, showcasing its strategic capital deployment to enhance shareholder value. Negative Points New equipment organic sales declined by 5% in the quarter, with significant declines in Asia, particularly China.Service operating profit decreased by $10 million at constant currency, with a 160 basis point contraction in operating margin due to higher labor and material costs.The company faced a 130 basis point decline in adjusted operating profit margin, attributed to operational challenges and unfavorable mix.Otis Worldwide Corp (OTIS) experienced project delays in the EMEA region due to the conflict in the Middle East, impacting modernization sales.The company anticipates potential negative impacts from the ongoing Middle East conflict, which could affect new equipment demand and project execution. Q & A Highlights Q: Can you explain the expected progression of service margin expansion throughout 2026?
A: Cristina Mendez, CFO, explained that service margins started at 23% in Q1 with a 160 basis point decline. They expect sequential improvement, with Q2 margins around 24%, stabilizing in Q3, and returning to margin expansion in Q4. Full-year margins should be slightly below 2025 levels. This progression is due to actions like pricing adjustments and strong backlog in modernization and repair.
Q: Regarding maintenance growth, is the 3% growth target for the full year or just the exit rate?
A: Judith Marks, CEO, clarified that the 3% growth is for the full year. The focus is on higher-value parts of the portfolio, with investments in service excellence and personnel to drive this growth. Retention rates have stabilized, and they are confident in achieving the 3% growth target.
Q: What challenges did Otis face in the high-value markets in Q1?
A: Judith Marks noted that the biggest challenge was in Europe, where they didn't see significant portfolio gains. This region represents half of their portfolio, and the team is focused on ensuring portfolio gains in high-revenue countries. The war in the Middle East was not a factor in this challenge.
Q: How does the acquisition of WeMaintain address concerns about ISPs competing with OEMs?
A: Judith Marks explained that WeMaintain is a digitally native ecosystem that uses AI and machine learning to enhance customer service. This complements Otis ONE and provides access to non-Otis units. The acquisition is expected to drive long-term value and growth.
Q: Can you provide more details on the repair business and its growth prospects?
A: Judith Marks highlighted that the repair business is non-discretionary and growing due to the aging installed base. It is the highest-margin product offering, with both reactive and proactive repair driving growth. Cristina Mendez added that repair is the second-largest activity within the service segment and is very accretive to profit.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
Arizona State Retirement System lessened its stake in Otis Worldwide Corporation (NYSE:OTIS – Free Report) by 6.6% in the fourth quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission. The firm owned 107,728 shares of the company’s stock after selling 7,557 shares during the period. Arizona State Retirement System’s holdings in Otis Worldwide were worth $9,410,000 at the end of the most recent quarter.
A number of other large investors have also added to or reduced their stakes in OTIS. Root Financial Partners LLC bought a new stake in shares of Otis Worldwide during the 3rd quarter valued at $26,000. Stance Capital LLC bought a new stake in shares of Otis Worldwide during the 3rd quarter valued at $27,000. Rakuten Investment Management Inc. bought a new stake in shares of Otis Worldwide during the 3rd quarter valued at $31,000. Westside Investment Management Inc. grew its position in shares of Otis Worldwide by 100.0% during the 3rd quarter. Westside Investment Management Inc. now owns 336 shares of the company’s stock valued at $31,000 after acquiring an additional 168 shares during the period. Finally, Physician Wealth Advisors Inc. grew its position in shares of Otis Worldwide by 57.7% during the 3rd quarter. Physician Wealth Advisors Inc. now owns 339 shares of the company’s stock valued at $31,000 after acquiring an additional 124 shares during the period. Institutional investors own 88.03% of the company’s stock.
Key Stories Impacting Otis Worldwide Here are the key news stories impacting Otis Worldwide this week:
Positive Sentiment: Management highlighted strong service revenue growth and reiterated fiscal‑year EPS guidance range (FY26: 4.200–4.240), signaling durable recurring revenue that supports longer‑term cash flow. Otis Worldwide Corp (OTIS) Q1 2026 Earnings Call Highlights: Strong Service Growth and … Positive Sentiment: Company reported sales growth driven by services, and some outlets flagged that Otis lifted its sales outlook, which can support multiple expansion if margins recover. Otis tops revenue view, lifts sales outlook as shares rise Positive Sentiment: Otis remains on dividend roundups as an income name, a signal to yield‑focused investors that cash return remains part of the thesis. Dividend Roundup: Otis Worldwide, Eaton, AGNC Invest, Morgan Stanley, and more Neutral Sentiment: Royal Bank of Canada trimmed its price target from $110 to $105 but kept an “outperform” rating — a cautious vote of confidence that still signals upside versus current levels. Royal Bank Of Canada price target change Neutral Sentiment: Earnings materials and call slides provide detail on backlog, service mix and regional dynamics; useful for modeling but not a market mover by itself. Otis Worldwide Corporation 2026 Q1 – Results – Earnings Call Presentation Negative Sentiment: Analysts and commentators flagged persistent margin pressure from labor and materials; Seeking Alpha calls out lackluster margin progress as a notable headwind that could limit earnings upside. Otis Worldwide: Lackluster Margin Progress Is A Notable Headwind Negative Sentiment: Company warned of tariff exposure and shipment delays related to the Middle East conflict, which pose short‑term cost and delivery risks for equipment sales and could pressure near‑term margins. Elevator maker Otis flags tariff hit, shipment delays amid Middle East conflict Otis Worldwide Stock Down 2.1% Shares of OTIS stock opened at $77.80 on Friday. The stock has a market cap of $30.01 billion, a P/E ratio of 20.69, a PEG ratio of 2.48 and a beta of 1.05. Otis Worldwide Corporation has a 52 week low of $75.27 and a 52 week high of $101.42. The company’s fifty day simple moving average is $83.50 and its two-hundred day simple moving average is $87.26.
Otis Worldwide (NYSE:OTIS – Get Free Report) last announced its quarterly earnings results on Wednesday, April 22nd. The company reported $0.89 EPS for the quarter, missing the consensus estimate of $0.91 by ($0.02). The company had revenue of $3.57 billion during the quarter, compared to analysts’ expectations of $3.77 billion. Otis Worldwide had a negative return on equity of 29.39% and a net margin of 10.11%.The firm’s revenue for the quarter was up 6.4% compared to the same quarter last year. During the same quarter in the previous year, the firm earned $0.92 EPS. Otis Worldwide has set its FY 2026 guidance at 4.200-4.240 EPS. On average, analysts anticipate that Otis Worldwide Corporation will post 4.14 EPS for the current fiscal year.
Otis Worldwide Increases Dividend The business also recently declared a quarterly dividend, which will be paid on Friday, June 12th. Shareholders of record on Friday, May 15th will be paid a $0.44 dividend. This represents a $1.76 annualized dividend and a yield of 2.3%. The ex-dividend date is Friday, May 15th. This is an increase from Otis Worldwide’s previous quarterly dividend of $0.42. Otis Worldwide’s dividend payout ratio is presently 48.00%.
Wall Street Analyst Weigh In OTIS has been the subject of a number of recent research reports. Royal Bank Of Canada cut their price objective on shares of Otis Worldwide from $110.00 to $105.00 and set an “outperform” rating for the company in a research report on Thursday. Morgan Stanley set a $88.00 price objective on shares of Otis Worldwide in a research report on Friday. New Street Research set a $98.00 price objective on shares of Otis Worldwide in a research report on Friday, January 30th. JPMorgan Chase & Co. downgraded shares of Otis Worldwide from an “overweight” rating to a “neutral” rating and set a $98.00 price objective for the company. in a research report on Friday, January 30th. Finally, Weiss Ratings reissued a “hold (c)” rating on shares of Otis Worldwide in a research report on Friday, March 27th. Three research analysts have rated the stock with a Buy rating, seven have given a Hold rating and one has assigned a Sell rating to the stock. According to MarketBeat.com, the stock presently has an average rating of “Hold” and a consensus target price of $97.64.
Read Our Latest Stock Analysis on Otis Worldwide
Insider Activity at Otis Worldwide In other Otis Worldwide news, CAO Michael Patrick Ryan sold 1,182 shares of the business’s stock in a transaction on Tuesday, February 10th. The shares were sold at an average price of $90.06, for a total value of $106,450.92. Following the sale, the chief accounting officer owned 3,504 shares in the company, valued at $315,570.24. The trade was a 25.22% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available through the SEC website. Also, insider Montlivault Stephane De sold 47,944 shares of the business’s stock in a transaction on Thursday, February 12th. The stock was sold at an average price of $92.25, for a total transaction of $4,422,834.00. Following the completion of the sale, the insider owned 29,176 shares in the company, valued at approximately $2,691,486. The trade was a 62.17% decrease in their position. The SEC filing for this sale provides additional information. Insiders have sold 158,013 shares of company stock worth $14,337,635 in the last quarter. 0.23% of the stock is owned by company insiders.
Otis Worldwide Profile (Free Report)
Otis Worldwide Corporation is a manufacturer, installer and servicer of vertical transportation systems, including elevators, escalators and moving walkways. The company designs and supplies new equipment for commercial, residential and industrial buildings, and provides ongoing maintenance and repair services aimed at maximizing equipment availability and safety. Otis also offers modernization solutions to upgrade aging systems and improve performance, accessibility and energy efficiency.
In addition to new equipment sales, a significant portion of Otis’s business derives from long-term service contracts and responsive maintenance work.
Recommended Stories Five stocks we like better than Otis Worldwide Want to see what other hedge funds are holding OTIS? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Otis Worldwide Corporation (NYSE:OTIS – Free Report).
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Students from schools in Athens, Greece and Hong Kong SAR win STEM and AI competition with concepts to help people during natural disasters
, /PRNewswire/ -- With their ideas to use advanced technology to support city officials, first responders and residents before and during natural disasters, student teams from Hong Kong and Athens, Greece were named co‑champions of Otis' Made to Move Communities™ student challenge, in recognition of the exceptional strength and impact of both teams' solutions. Otis (NYSE: OTIS) is the world's leading elevator and escalator manufacturing, installation, service and modernization company.
Students from HKFYG Lee Shau Kee College in Hong Kong SAR and Geniko Lyceum Filothei in Athens, Greece are global co-champions in this year’s Otis Made to Move Communities challenge, with their concepts to use advanced technology to support city officials, first responders and residents before and during natural disasters. "Congratulations to the student teams from and HKFYG Lee Shau Kee College and Geniko Lyceum Filothei, this year's co‑champions of our Made to Move Communities global challenge. Their projects reflect not only technical ingenuity and creativity, but also a clear focus on helping vulnerable communities and first responders when it matters most," said Randi Tanguay, Otis Chief Communications Officer. "The students — with support from their mentors — demonstrate the confidence and capability of a new generation, ready to apply technology with thoughtfulness and purpose. We hope they continue exploring, identifying challenges, and finding ways to use technology to help their communities connect and thrive."
About this year's challenge: A focus on natural disasters
The annual Made to Move Communities program inspires students to address real-world mobility challenges aligned with global trends and areas where Otis' business expertise can make meaningful impact. This year's theme focused on natural disasters, as students applied STEM skills and AI-driven thinking to develop mobility solutions to help vulnerable populations and first responders react to increasingly frequent and severe events.
The team from Geniko Lyceum Filothei in Filothei, Athens, Greece developed a concept for an AI-enabled container that tracks rainfall fluctuation and resultant water levels and activates a preventive response system to alert local emergency management personnel and protect vulnerable residents during flood risk events.
The team from HKFYG Lee Shau Kee College in Hong Kong SAR developed a concept for a combined AI and augmented reality system to help first responders see and stay connected in smoke-filled, low-visibility situations.
More than 200 high school students from 18 schools in 14 countries and territories participated in this year's Made to Move Communities challenge.
Continuing STEM education
As global co-champions, the students at HKFYG Lee Shau Kee College and Geniko Lyceum Filothei earned $35,000 in grants for each of their respective schools.
"This achievement reflects the creativity, curiosity and hard work our students bring to everything they do," said Lin Chun Pong, Principal of HKFYG Lee Shau Kee College. "They've transformed classroom learning into a practical solution with the potential to address real challenges beyond our school walls, and that's an experience that will stay with them. We are incredibly proud of their accomplishment."
"It has been inspiring to watch these students grow and apply technical and critical‑thinking skills to real‑world challenges," said Petros Matzakos, Principal of Geniko Lyceum Filothei. "We are incredibly proud of their achievement and thankful to our staff and the Otis volunteer mentors who made this experience — and future opportunities — possible."
To learn more about the Made to Move Communities program, visit www.otis.com/mtmc.
What is the Otis Made to Move Communities program?
Otis' Made to Move Communities™ program is the company's flagship social impact program. It is a global student challenge inspiring creative, STEM- and AI-based solutions to real-world mobility issues.
Over the past several months, the student teams worked alongside more than 150 Otis mentors to develop and refine their concepts, presenting them to panels of Otis judges across the company's four regions: Americas, Asia Pacific, Greater China and EMEA (Europe, Middle East & Africa). Four regional winners then went on to compete in a final, global competition, judged by members of the Otis Executive Leadership Team.
What are the goals of the Made to Move Communities program?
The Made to Move Communities program brings together students, educators and Otis colleagues as mentors, with the goals of advancing STEM and leadership skills to help build the next generation of talent, ensuring future workforce readiness and sustaining innovation.
What is the community impact of the Made to Move Communities program?
Since 2020, Made to Move Communities has engaged over 1,000 Otis colleagues in mentoring more than 1,250 students, and delivered 145 grants totaling nearly $1.5 million to support ongoing STEM education at participating schools.
Why is the Made to Move Communities program focused on natural disasters this year?
Each year, Otis identifies a theme grounded in global trends and areas where its business expertise can make meaningful impact, such as aging populations, accessibility or emerging technology.
Otis chose this year's theme as over the past half century, natural disasters have increased in frequency at least five-fold and have also become more intense. Disasters can often lead to or exacerbate human mobility challenges, vulnerabilities and needs among affected communities, including by first responders.
About Otis
Otis gives people freedom to connect and thrive in a taller, faster, smarter world. The global leader in the manufacture, installation, service and modernization of elevators and escalators, we move 2.5 billion people a day and maintain approximately 2.5 million customer units worldwide — the industry's largest Service portfolio. You'll find us in the world's most iconic structures, as well as residential and commercial buildings, transportation hubs and everywhere people are on the move. Headquartered in Connecticut, USA, Otis is 72,000 people strong, including 45,000 field professionals, all committed to manufacturing, installing and maintaining products to meet the diverse needs of our customers and passengers in more than 200 countries and territories. To learn more, visit www.otis.com and follow us on LinkedIn, YouTube, Instagram and Facebook @OtisElevatorCo.
Media Contact:
Ed Jacovino
[email protected]
+1 (860) 674-3351
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Otis CEO Judy Marks said the company can't hire elevator mechanics fast enough. Bloomberg/Getty Images In an era of rampant layoffs, it can feel like no job is safe.
Except, perhaps, elevator mechanics.
Judy Marks is the CEO of elevator giant Otis and oversees a workforce of roughly 72,000 employees. That includes about 45,000 mechanics — and she says the company can't hire them fast enough.
"The demand is high," Marks told Business Insider.
When Otis spun off from its parent company in April 2020, it employed about 40,000 of these field professionals. Today, that number has increased by about 12.5% to 45,000, Otis said. The Bureau of Labor Statistics projected that elevator and escalator installers and repairers will grow by 5% between 2024 and 2034, which is 2% above the average for all occupations.
Beyond installing elevators and escalators, mechanics also maintain and repair equipment, she said. In some markets, including Japan, she said a declining population combined with a boom in refurbishment and construction has made hiring a challenge.
Mechanics also don't have to worry about losing their jobs to automation in the immediate future. As a regulated industry in most countries, Marks said humans are essential to the job. The role requires years of training and physical labor, which hasn't been easily replaced by robots so far.
"This is truly a craft skill," Marks said.
A long-term careerMany skilled-trade jobs have been on the rise in recent years. LinkedIn released data last year that revealed construction was the fastest-growing industry for new college grads. In 2026, it ranked construction fifth among the fastest-growing industries for new grads.
Marks said elevator mechanics, in particular, tend to stay in the profession for decades. She said Otis has roughly as many mechanics with zero to five years of experience as it does workers who have been with the company for more than 30 years.
"We don't have this kind of 'silver cliff' that's coming," Marks said, referring to how some older workers struggle in other trades.
"Most of them stay in the trade the rest of their life, and a lot of them, their fathers or mothers or grandfathers were in it."
In the US, Otis elevator mechanics are represented through a multi-employer union. Marks said it offers an apprenticeship for people starting at 18 years old, working for Otis during the day as helpers while attending elevator service school at night. After completing a four-year apprenticeship and passing a mechanic's exam, workers achieve journeyman status in the trade.
One of the highest-paying trade jobsElevator mechanics sit at the top of the pay scale when it comes to trade jobs.
The BLS released data on Friday that found that elevator and escalator installers and repairers earned the highest average salary among construction and extraction occupations in May 2025, at $109,820, with the 90th percentile at $158,890. That's well above both the category's average wage of $65,360 and the overall US average wage of $69,770, according to the report.
Other top-paying trades in the category included first-line supervisors of construction trades and extraction workers, who earned an average of $86,450, and terrazzo workers and finishers, who made $84,920, the report said.
In addition to solid pay, elevator mechanic roles at Otis also include eligibility for paid college tuition.
"When they come out and come work for us, I'll pay if they want to go to college," Marks said.
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Otis Worldwide Corporation remains a portfolio favorite, despite a 27.5% share price decline over the past year driven by China headwinds. OTIS trades well below its 5-year average multiple, with a forward P/E of 16.95x and a compelling 66% upside potential if it re-rates to 25x earnings by 2028. Recent initiatives—cost savings, a majority stake in WeMaintain, and a new elevator for data centers—position OTIS for margin recovery and growth.
Includes options for factory preassembled modules to streamline installation time Offers modernization packages for commercial escalators that improve safety and reliability, and reduce disruption during the modernization process Flexible upgrade options allow customers to select the level of modernization that best fits their building, budget and operational needs , /PRNewswire/ -- Otis Worldwide Corporation (NYSE: OTIS), the world's leading elevator and escalator manufacturing, installation, service and modernization company, has announced the global launch of its Otis Link™ MOD suite of commercial escalator modernization solutions, giving building owners a safer, smarter and more efficient way to upgrade aging escalators.
Otis’ modernization solutions provide improved reliability, less disruption to building operations and tenants, and a clearer more manageable roadmap for long-term performance. Global populations, infrastructure and equipment continue to age. Of the more than 1 million escalators installed globally, predominantly commercial escalators, nearly 20%1 are now in the modernization window, requiring updates to keep pace with evolving safety standards, usage demands and performance expectations. Otis' modernization solutions provide improved reliability, less disruption to building operations and tenants, and a clearer more manageable roadmap for long-term performance.
Otis Link MOD offers a suite of comprehensive upgrade packages, including the new Otis Link MOD Pro package, which delivers a complete modernization of critical commercial escalator components and aesthetics while retaining the existing truss—the escalator's structural backbone. Its modular, factory‑preassembled design streamlines modernization, significantly shortening project timelines. By minimizing on‑site work, the system reduces jobsite hazards and downtime in busy commercial environments and adapts easily to a wide range of building layouts.
"Across the globe, our customers are balancing aging infrastructure with the need to keep people moving safely and reliably every day. That challenge is only intensifying as populations age and demand for buildings – and the systems that support them – continues to grow," said Claire Miller, Executive Vice President and Chief Growth Officer, Otis. "Our Otis Link MOD solutions are designed to help customers extend the life and value of their escalators while minimizing disruption to their daily operations, so passengers can continue to move with confidence. By combining advanced technology and engineering with our deep modernization expertise, we're enabling building owners to extend the life of their escalators and deliver a mobility experience that meets modern safety and performance expectations."
The Otis Link MOD suite of solutions includes four packages2 – Link MOD Prime, Link MOD Plus, Link MOD Pro and full replacement with an Otis Link escalator. All Link MOD packages are powered by Otis' industry-leading technology and designed to allow customers to choose the scope and pace of their escalator modernization.
Visit www.otis.com for full details.
What are the benefits of Otis' Link MOD packages?
Enhance Safety
Improved step stability featuring the Otis Step Safety System, engineered to keep escalator steps firmly on their tracks. Optional patented mini moving skirt, designed to help prevent objects from becoming caught (available with full replacement solution). Integrated handrail sanitizing and cleaning options that help reassure users about the cleanliness of the equipment. Minimize the unexpected
Customers are in control, making informed choices about the scope, cost and pace of their escalator modernization with guidance from Otis experts. The Otis Link MOD Pro package offers a modular, pre-assembled design that minimizes disruption on site. Improve performance with technology-driven reliability
The self-adjusting handrail system automatically adjusts the handrail tension while the escalator is running and reduces handrail-related callbacks by over 90% compared to units without this technology.3 An upgraded electronic controller minimizes shutdowns and keeps escalators available when customers need them. The Otis ONE™ IoT platform (where available4) collects and analyzes data from escalators' smart sensors to deliver performance information, proactive communication and predictive insights to Otis' customers, and the field professionals servicing their units. Available in the U.S. and Canada, Otis Link MOD escalators feature a direct drive system that eliminates the traditional drive chain, offering greater flexibility for installation in existing buildings, improved reliability and reduced lubrication needs. Operational features
An intelligent lubrication system reduces oil consumption by adjusting the amount of oil automatically at each lubrication point. A standby or intermittent use mode option reduces downtime, energy consumption and operating costs when the escalator is idle. Bring passenger experience to the next level
Options include aesthetic packages, handrail colors and customizable LED lighting. Seamless support
Otis' highly trained technicians and support teams are available to properly maintain escalators, with a focus on safety, efficiency and reliability. About Otis
Otis gives people freedom to connect and thrive in a taller, faster, smarter world. The global leader in the manufacture, installation, service and modernization of elevators and escalators, we move 2.5 billion people a day and maintain approximately 2.5 million customer units worldwide – the industry's largest Service portfolio. You'll find us in the world's most iconic structures, as well as residential and commercial buildings, transportation hubs and everywhere people are on the move. Headquartered in Connecticut, USA, Otis is 72,000 people strong, including 45,000 field professionals, all committed to manufacturing, installing and maintaining products to meet the diverse needs of our customers and passengers in more than 200 countries and territories. To learn more, visit www.otis.com and follow us on LinkedIn, YouTube, Instagram and Facebook @OtisElevatorCo.
Based on Otis internal data. Otis Link MOD package availability varies by market. Visit Otis.com or contact your Otis sales representative to learn more. Based on Otis internal data with Otis Service contract. Otis ONE features are subject to a maintenance contract and paid tiered subscription with Otis. Otis ONE for Link and Link MOD suite of offerings is available in Asia Pacific, China, Europe and the Middle East. Media Contact:
Richard Howat
Phone: +44 7392860548
Email: [email protected]
It has been about a month since the last earnings report for Otis Worldwide (OTIS - Free Report) . Shares have lost about 9.9% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Otis Worldwide due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Otis Worldwide Corporation before we dive into how investors and analysts have reacted as of late.
Otis Worldwide Q1 Earnings Fall Short of Estimates, Sales BeatOtis Worldwide reported mixed first-quarter 2026 results, wherein earnings missed the Zacks Consensus Estimate and declined year over year. Meanwhile, net sales surpassed the same and increased from the prior year's reported figure.
Otis Worldwide’s first-quarter results reflected broad-based momentum in Service, led by repair activity, alongside solid order and backlog improvement in the modernization business. The company has emphasized actions around operational execution, pricing and cost efficiency as it works to monetize investments and improve margin performance in the coming quarters.
However, management attributed the margin pressure to tariff impacts relative to the prior year, continued Service investments that began in the second quarter of last year and accelerated this year, and shipment delays tied to geopolitical disruption in the Middle East.
Inside OTIS’ Q1 HeadlinesOTIS reported earnings per share (EPS) of 89 cents, missing the Zacks Consensus Estimate of 91 cents by 2.2%. In the year-ago quarter, it reported an adjusted EPS of 92 cents.
Net sales of $3.57 billion surpassed the consensus mark of $3.5 billion by 2% and increased 6.4% on a year-over-year basis. Organically, net sales were up 1% year over year. Favorable foreign exchange movement supported sales growth by 5%. A standout in the quarter was repair, with net sales up 16% at actual currency and organic repair sales up about 10%.
Adjusted operating margin contracted 130 basis points year over year to 15.4%, reflecting weaker segment performance, partially offset by a favorable segment mix.
Segment Details of OTISService: The net sales of this segment increased 11% year over year to $2.42 billion. A 5% rise in organic sales was accompanied by a 5% favorable foreign exchange movement. Organic maintenance and repair sales increased 4% and organic modernization sales rose 6% from the year-ago quarter. The Modernization backlog at constant currency increased 30% year over year.
Segment operating margin contracted 160 bps year over year to 23% due to higher volume and favorable pricing, which were more than offset by higher labor and material costs, investments and mix effects.
New Equipment: This segment’s net sales of $1.15 billion fell 1% from the prior-year period. Organic sales declined 5%.
New Equipment orders rose 1% at constant currency, with more than 20% strength in the Americas and low single-digit growth in EMEA, partially offset by more than 20% decline in the Asia Pacific and a low teens decline in China. The segment’s backlog increased 6% at actual currency and 3% at constant currency, providing some support for future revenue conversion despite near-term delivery challenges.
Segment operating margin contracted 240 bps year over year to 3.3%. The downtrend was due to the impacts of lower volume, unfavorable price and mix, which was partially offset by productivity tailwinds.
Financial Position of OTISOtis Worldwide had cash and cash equivalents of $834 million as of March 31, 2026, down from $1.1 billion reported at 2025-end. Long-term debt decreased to $6.88 billion as of March 31, 2026, from $6.9 billion at the end of 2025.
Net cash flows provided by operating activities were $413 million as of March 31, 2026, up from $190 million a year ago.
Adjusted free cash flow totaled $272 million as of March 31, 2026, up from $186 million a year ago.
OTIS Revises 2026 GuidanceThe company expects net sales in the range of $15.1-$15.3 billion (up from the prior outlook of $15-$15.3 billion), implying approximately 4.6-6% year-over-year growth. Organic sales growth is still projected in the low to mid-single-digit range.
Organic New Equipment sales are now expected to range from low single digits to flat (previously projected as flat to low single digits), while Organic Service sales are still anticipated to grow in the mid to high-single-digit range.
Adjusted operating profit is projected at $2.5 billion (down from the prior range of $2.5-$2.6 billion), now reflecting an increase of $20-$60 million at constant currency and $60-$100 million at actual currency.
Adjusted earnings are forecasted at $4.20-$4.24 per share, while adjusted free cash flow is expected to be between $1.6 billion and $1.65 billion (compared with the earlier outlook of $1.6-$1.7 billion).
How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates review.
VGM ScoresAt this time, Otis Worldwide has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Otis Worldwide has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
T-Mobile US and OTIS Worldwide are both down over 25% in the past year, creating long-term buying opportunities. TMUS boasts the lowest leverage among peers, aggressive buybacks, and raised guidance, with a forward P/E under 17x and double-digit dividend growth expected. OTIS faces temporary inflation and China headwinds but shows stabilizing orders, cost savings, and trades at a forward P/E of 16.7x, below historical and sector averages.
HomeIndustriesComputers/ElectronicsTech StocksTech StocksNvidia’s Jensen Huang spoke highly of Marvell, and his comments are sparking broad enthusiasm for providers of optical componentsLast Updated: June 2, 2026 at 6:24 p.m. ET
First Published: June 2, 2026 at 3:11 p.m. ET
Nvidia CEO Jensen Huang had high praise today for Marvell, a maker of optical components that he said could become a $1 trillion company. And investors seem to be transferring those rosy feelings to other optical-components stocks.
Shares of Marvell MRVL and Coherent COHR were up 33% and 18%, respectively, while shares of Lumentum Holdings LITE surged 14%. Corning’s stock GLW was also up 13% on Tuesday.
It has been about a month since the last earnings report for Lumentum (LITE - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lumentum due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.
Lumentum Q3 Earnings Top Estimates, Revenues Up Y/YLumentum Holdings delivered non-GAAP earnings of $2.37 per share, which beat the Zacks Consensus Estimate by 5.8% and surged significantly from 57 cents reported in the year-ago quarter.
Revenues of $808 million increased 90.1% year over year and edged past expectations by 0.37%. The quarter’s results reflected strong cloud and AI demand, with components revenue reaching $533.3 million (66% of total sales), supported by momentum in laser chips and “scale-across” products that management highlighted as an important margin lever.
LITE’s Systems Growth Led by Cloud Transceiver StrengthSystems revenues were $275.1 million, rising 121.1% year over year and 24% sequentially. Management said cloud transceivers accounted for the majority of the segment’s growth as Lumentum leveraged an expanded manufacturing footprint in Thailand.
Optical circuit switches also contributed, with management describing a multi-year, multibillion-dollar purchase agreement as a foundation for long-term growth. However, the company noted that supply-chain tightness remains a gating factor for the pace of the ramp, especially given a step-up in requested output.
Lumentum Highlights Scale-Across Demand and Laser MomentumLumentum emphasized that its “scale-across” portfolio is becoming more material as hyperscalers link compute domains across distributed data center architectures. Management called out pump lasers and narrow linewidth laser assemblies as key building blocks for these networks, with the latter providing the precision needed for higher-speed coherent links.
Operationally, the company posted strong shipment trends across core components. Narrow-linewidth laser assemblies grew more than 120% year over year, while pump laser shipments increased 80%, reflecting demand for higher-bandwidth networking and optical amplification. Management also pointed to new company records in EML shipments, driven by 100-gig lane speeds, with 200-gig EML revenue more than doubling sequentially.
LITE’s Margins Expand Sharply on Mix and UtilizationNon-GAAP gross margin was 47.9%, up 540 basis points (bps) sequentially and significantly expanded from 35.2% reported in the year-ago quarter. Management attributed the improvement to better factory utilization, selective pricing actions and a more favorable mix, with strength in data center laser chips a key contributor.
Non-GAAP operating expenses were $126.2 million (up 22.1% year over year), or 15.6% of revenue, reflecting continued investment in research and development and commercial support for expanding cloud opportunities while maintaining tight cost controls.
Profitability translated into sizable operating leverage. Non-GAAP operating margin improved to 32.2%, up 700 bps sequentially and significantly expanded from 10.8% reported in the year-ago quarter.
Lumentum’s Balance Sheet Bolstered by Large Equity ProceedsLumentum ended the fiscal third quarter with $3.17 billion in total cash, cash equivalents, and short-term investments, up from $2.02 billion sequentially, primarily due to proceeds from the issuance of Series A Convertible Preferred Stock. The larger cash position provides flexibility as the company scales manufacturing and supports new program ramps tied to cloud and AI infrastructure.
Working capital and investment levels reflected growth expectations. Inventories increased by $62 million sequentially to support expected demand, and capital expenditures totaled $125 million, focused mainly on manufacturing capacity expansion. Management also underscored longer-term capacity efforts, including progress toward converting an acquired Greensboro, NC, facility to indium phosphide manufacturing.
LITE Guides to Another Record Quarter as 1.6T RampsFor the fourth quarter of fiscal 2026, Lumentum expects revenues between $960 million and $1.01 billion. The company guided non-GAAP operating margin to 35-36% and non-GAAP earnings to $2.85-$3.05 per share, based on an effective tax rate assumption of 16.5% and approximately 102 million diluted shares.
Management said a meaningful driver of sequential growth is expected to be transceivers, with 1.6T shipments poised to ramp in the fiscal fourth quarter. The company also expects further progress on integrating internal CW lasers into its module portfolio, with management indicating that roughly 20% of modules in the near-term mix could include Lumentum’s own CW lasers, alongside ongoing yield improvements and efforts to reduce scrap.
How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 19.17% due to these changes.
VGM ScoresCurrently, Lumentum has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a grade of F on the value side, putting it in the lowest quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Lumentum has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry PlayerLumentum belongs to the Zacks Communication - Components industry. Another stock from the same industry, NETGEAR, Inc. (NTGR - Free Report) , has gained 2.5% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.
NETGEAR reported revenues of $158.82 million in the last reported quarter, representing a year-over-year change of -2%. EPS of $0.06 for the same period compares with $0.02 a year ago.
NETGEAR is expected to post earnings of $0.02 per share for the current quarter, representing a year-over-year change of -66.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +9.7%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for NETGEAR. Also, the stock has a VGM Score of B.
The AI memory supercycle is real and still running. High-bandwidth memory (HBM) became the scarce resource around which the entire AI industry organized. Investors who got there early made a lot of money.
This caused the conversation in AI infrastructure to shift. Power is one constraint. But the issue that engineers are losing sleep over is optical interconnect, the technology that moves data between chips at the speed of light, inside and between servers. As AI models grow larger and more distributed, moving data across copper wires becomes too slow and too power-hungry.
Silicon photonics is becoming the next critical layer of the AI stack. The silicon photonics market is estimated at $3.6 billion in 2026 and is projected to reach $15.7 billion by 2033 -- a 23.2% compound annual growth rate. Lumentum Holdings (LITE +3.94%) is the stock in this market I'd buy right now, before this cycle gets crowded.
Image source: Getty Images.
In March 2026, Nvidia (NVDA 0.11%) invested $2 billion in Lumentum through a private placement of convertible preferred stock and signed a multibillion-dollar purchase commitment for advanced laser components. One month later, Lumentum announced a new 240,000-square-foot manufacturing facility in Greensboro, North Carolina, acquired from semiconductor company Qorvo. The facility will produce indium phosphide (InP)-based optical devices -- the lasers that power next-generation AI transceivers -- with Nvidia confirmed as a customer.
The Greensboro facility isn't expected to ramp production until mid-2028. Think about that for a second. Nvidia is not only paying for Lumentum's future capacity today -- it's building supply chain infrastructure for a product cycle that won't fully arrive for two years. That is a sign that the company is locking in a critical supplier before demand overwhelms supply.
Today's Change
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A risk: Lumentum's stock is up over 1,100% in the last year Lumentum's stock has moved sharply in 2026, which might make it feel late. Over the past year, the stock has surged an extraordinary 1,110%, climbing from roughly $77 to $938 per share.
But the InP fab is not yet producing. When that fab alone starts operations, it could bump the ticker up another 100%. The 1.6 terabit-per-second transceiver generation has barely shipped at scale. The co-packaged optics transition -- where the transceiver moves inside the chip package itself -- is a product cycle that has yet to produce meaningful revenue at any company.
The risk is with Lumentum timing. Optical supercycles can stretch, and if Nvidia's roadmap shifts or AI capex growth slows, Lumentum's growth rates could compress before Greensboro comes online. Dilution from the preferred stock conversion is also worth watching.
But if you're looking for the infrastructure layer that moves from "important" to "indispensable" over the next five years, photonics is the answer. And Lumentum is the company with a $2 billion strategic partner, a domestic fab, and a product roadmap to back it up.
Key Takeaways LITE raised Q4 FY26 revenue guidance to $960M-$1.01B on strong AI networking demand.Lumentum posted record Q3 FY26 revenue growth of 90% YoY to $808.4M.LITE is expanding capacity with its North Carolina fab to support long-term AI networking growth. Lumentum Holdings’ (LITE - Free Report) growth outlook is strengthening as surging AI infrastructure demand continues to drive revenue expansion, margin improvement and long-term business opportunities. The company raised its fiscal fourth-quarter guidance amid accelerating demand across cloud networking, optical interconnect and hyperscale data center infrastructure markets. Lumentum expects fourth-quarter fiscal 2026 revenues between $960 million and $1.01 billion, driven by strong momentum in cloud transceivers, laser chips and scale-across networking products.
Lumentum’s third-quarter fiscal 2026 performance highlighted the strength of this trend, with revenues surging 90% year over year to a record $808.4 million. Management emphasized that hyperscalers are increasingly deploying distributed AI data center architectures that require high-bandwidth optical synchronization across multiple facilities. This shift is driving strong demand for the company’s pump lasers, wavelength-selectable switches and narrow linewidth laser assemblies.
LITE is also benefiting from robust adoption of AI-related laser chips and cloud transceivers. Record EML laser chip shipments, rapid growth in 200-gig EML revenues and the upcoming ramp of 1.6T transceivers are strengthening the company’s competitive positioning in next-generation AI infrastructure markets. Importantly, management noted that several critical optical components remain effectively sold out for the foreseeable future, reflecting strong underlying demand conditions.
Lumentum is simultaneously expanding manufacturing capacity to support long-term growth. Its recently acquired indium phosphide fab in North Carolina is expected to provide years of additional production capability for AI networking applications. Coupled with improving product mix and operating leverage, these investments are enhancing profitability and reinforcing Lumentum’s long-term growth potential.
Lumentum’s Competitors Gain Momentum From AI DemandMarvell Technology (MRVL - Free Report) is gaining momentum from rising AI infrastructure demand, making MRVL a strong competitor to Lumentum in AI networking. MRVL is benefiting from strong demand for optical interconnects, custom silicon and switching solutions used in hyperscale AI clusters. The company’s scale-out, scale-up and scale-across networking technologies, along with its NVIDIA partnership in silicon photonics and AI infrastructure, strengthen its competitive position. However, rising R&D spending and intense competition remain key challenges for MRVL.
Coherent Corp. (COHR - Free Report) continues to gain momentum from rising AI infrastructure demand, emerging as a key rival to Lumentum in optical networking and photonics. COHR is seeing strong growth in 800G and 1.6T transceivers, optical circuit switches (OCS) and co-packaged optics (CPO), supported by rising AI data center demand and its NVIDIA partnership. The company also benefits from its 6-inch indium phosphide production capability, which improves yields and expands capacity. Yet, supply constraints and high capital spending remain challenges for COHR.
LITE’s Share Price Performance, Valuation & EstimatesLumentum’s shares have surged 134.3% year to date, significantly outperforming the Zacks Computer and Technology sector’s 16.2% gain and the Zacks Communication – Components industry’s 105.9% rise.
LITE’s Price Performance
Image Source: Zacks Investment Research
LITE trades at a premium with a forward 12-month P/E ratio of 50.48X compared with the industry's 49.65X. LITE carries a Value Score of F.
LITE’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for LITE’s fiscal 2026 earnings is pegged at $8.21 per share, up 0.7% over the past 30 days and reflecting remarkable growth of 298.54% year over year.
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Lumentum flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Portfolio returned -4.62% ((gross)) and the S&P 500® Index returned -4.33% for the first quarter of 2026. Vertiv is an essential supplier of cooling, power management, and rack systems to AI data centers, with its orders backlog more than doubling on a year-over-year basis. NVIDIA announced that it would invest $2 billion in Lumentum to secure future capacity, further highlighting Lumentum's growing market power as a key provider of mission-critical components.
Key Takeaways Lumentum is expanding CPO and laser chip capacity to support growing AI data center demand.LITE expects up to $1.01B in Q4 fiscal 2026 revenue with improving profitability guidance.Lumentum's AI networking portfolio and vertical integration strengthen long-term positioning. Lumentum Holdings’ (LITE - Free Report) shares have declined 14.9% over the past month, significantly underperforming the broader Zacks Computer and Technology sector’s modest 0.2% decline. The pullback reflects investor concerns surrounding supply-chain bottlenecks, execution risks tied to aggressive AI-related capacity expansion and persistent weakness across non-AI businesses despite strong quarterly results.
Investors also remain cautious about elevated AI infrastructure CapEx, rising inventory levels and large-scale manufacturing expansion initiatives, which could pressure near-term profitability and execution. In addition, continued softness in industrial lasers and cable access markets has reinforced concerns over the company’s growing dependence on AI-driven demand for growth.
Despite these near-term headwinds, Lumentum continues to strengthen its position in Optical Interconnect & Data Center Networking, Co-Packaged Optics (CPO) & Advanced Laser Chip Expansion and Manufacturing Capacity Expansion & Vertical Integration Strategy. This raises a key question for investors: Does this recent decline create an attractive buying opportunity, or do the risks still outweigh the long-term growth potential? Let’s take a closer look.
Strong CPO & Laser Chip Demand Aids LITE’s ProspectsLumentum Holdings’ expanding presence in CPO and advanced laser chip technologies is emerging as one of the company’s strongest long-term investment drivers. Management highlighted that ultra-high-power laser chip manufacturing for CPO applications is ramping according to plan, with meaningful revenue contribution expected by the December 2026 quarter. The company has already secured a multi-hundred-million-dollar purchase order scheduled for the first half of calendar 2027, underscoring growing customer confidence in its next-generation optical solutions. In addition, Lumentum continues collaborating with multiple CPO customers through turnkey external laser source module solutions, strengthening its position in future AI networking architectures.
The opportunity is significant because co-packaged optics is increasingly viewed as a critical technology for solving power consumption, bandwidth density and scalability challenges in AI data centers. Lumentum’s leadership in electro-absorption modulated lasers (EMLs), CW lasers and indium phosphide-based photonics gives it a strategic advantage as hyperscalers transition toward higher-speed 1.6T and future AI interconnect technologies. To support this growth, the company acquired a fifth indium phosphide fab in North Carolina, ensuring production capacity for many years of future expansion.
LITE’s Strong Portfolio Drives Competitive EdgeLITE’s expanding AI optical networking portfolio continues to strengthen its long-term competitive positioning despite recent stock underperformance relative to rivals like Coherent Corp. (COHR - Free Report) and Broadcom Inc. (AVGO - Free Report) , though it has performed better than Ciena Corporation (CIEN - Free Report) . Over the past month, Coherent shares have gained 5.9%, while Broadcom has declined a comparatively modest 7.4%. In contrast, Ciena shares have dropped a steeper 19.7%.
Lumentum continues to benefit from strong demand for its narrow linewidth laser assemblies, pump lasers, EMLs and wavelength selective switches, driven by hyperscaler investments in AI infrastructure and scale-across data center architectures. Coherent remains a major competitor in optical networking, photonics and high-speed transceivers, while Broadcom Inc. competes aggressively in AI interconnect, networking silicon and CPO technologies. However, Lumentum’s vertically integrated indium phosphide manufacturing capabilities and growing exposure to CPO applications strengthen its long-term positioning.
Lumentum also competes with Ciena Corporation in optical transport and high-capacity networking systems for telecom and cloud operators. As AI clusters become larger and more bandwidth-intensive, Lumentum appears well-positioned to compete effectively across the AI optical networking market.
LITE’s One-month Price Return Performance
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LITE’s Earnings Estimate Revision Shows Positive TrendFor the fourth quarter of fiscal 2026, the company expects revenues between $960 million and $1.01 billion, highlighting confidence in continued growth across cloud and AI infrastructure markets. Lumentum also guided non-GAAP earnings to $2.85-$3.05 per share, suggesting improving profitability and operating leverage.
The Zacks Consensus Estimate for fourth-quarter fiscal 2026 revenues is currently pegged at $986.69 million, indicating a massive 105.26% increase from the year-ago quarter’s reported figure. In addition, the consensus estimate for LITE’s fiscal 2026 earnings stands at $2.96 per share, which has increased 13% over the past 60 days. The estimate also reflects remarkable year-over-year earnings growth of 236.36%.
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LITE Trades Higher Than Sector & IndustryLumentum trades at a premium valuation as reflected in its Value Score of F. In terms of the 12-month price/sales (P/S), LITE is currently trading at 12.93X, higher than the Zacks Communication – Components industry and the Zacks Computer and Technology sector’s 7.38X and 6.59X, respectively.
Lumentum’s premium valuation is supported by its strong exposure to rapidly growing AI infrastructure markets, expanding demand for optical networking products and leadership in co-packaged optics (CPO), laser chips and cloud photonics technologies.
Price/Sales Ratio (F12M)
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Verdict: Buy LITE for NowAlthough near-term risks surrounding supply-chain constraints and aggressive capacity expansion remain, Lumentum’s accelerating exposure to AI optical networking, co-packaged optics and advanced laser technologies continues to strengthen its long-term outlook. Supported by rising earnings estimates, strong hyperscaler demand and expanding manufacturing scale, the recent decline may represent an attractive entry point into a rapidly growing AI infrastructure market.
LITE currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
