Company Reports

Otis is the largest player in the global elevator and escalator industry, operating within a mature, consolidated, and structurally attractive market. The company generates more than 65% of its revenue—and the majority of its profits—from its services business, which benefits from the world’s largest installed base. This entrenched position underpins stable revenue, high margins, and recurring cash flows.

Otis grew service sales 9% organically in the second quarter, the strongest pace since the 2020 spinoff, but margin pressure in that segment pushed management to cut 2026 adjusted EPS guidance to $4.01-$4.05.

Otis posted 10% organic growth for the repair business in the first quarter, but the service segment's margin contracted 160 basis points to 23.0%, missing management's own guidance. Full-year EPS guidance was cut to $4.20-$4.24, implying 4%-5% growth versus a previously implied ceiling near $4.45.

Otis is the largest player in the global elevator and escalator industry, operating within a mature, consolidated, and structurally attractive market. The company generates more than 65% of its revenue—and the majority of its profits—from its services business, which benefits from the world’s largest installed base. This entrenched position underpins stable revenue, high margins, and recurring cash flows.

Otis is the largest player in the global elevator and escalator industry, operating within a mature, consolidated, and structurally attractive market. The company generates more than 65% of its revenue—and the majority of its profits—from its services business, which benefits from the world’s largest installed base. This entrenched position underpins stable revenue, high margins, and recurring cash flows.

Otis closed 2025 with a strong fourth quarter, delivering earnings growth, margin expansion, and robust cash flow, driven by its high-margin service business. New equipment remained a drag, primarily due to China. Management expects group organic growth to continue in 2026.

Otis reported an improved third-quarter 2025, with organic sales up 2% and adjusted operating profit up 6%, driven by record service margins and early signs of stabilization in new equipment. Adjusted EPS grew 9%, prompting management to raise the midpoint of full-year guidance.

Otis is the largest player in the global elevator and escalator industry, operating within a mature, consolidated, and structurally attractive market. The company generates more than 60% of its revenue—and the majority of its profits—from its services business, which benefits from the world’s largest installed base. This entrenched position underpins stable revenue, high margins, and recurring cash flows.

Otis reported flat adjusted EBIT for the second quarter, with service revenue growth offset by lower new-equipment sales. Shares were down about 6% in premarket trading on July 23 as guidance was lowered.

Otis reported flat adjusted EBIT for the first quarter of 2025 as service revenue growth was offset by lower new equipment sales. Shares fell 6% intraday after management issued cautious full-year margin guidance, with near-term profitability expected to be hit by tariffs and project delays.

We take a fresh look at Otis as we transfer coverage. Otis the largest global elevator company and generates revenue through the sale of new elevators, modernizing old equipment, and servicing its installed base. Its operations span globally, with a strong presence in the US.

Otis is the largest player in the global elevator and escalator industry, operating within a mature, consolidated, and structurally attractive market. The company generates more than 60% of its revenue—and the majority of its profits—from its services business, which benefits from the world’s largest installed base. This entrenched position underpins stable revenue, high margins, and recurring cash flows.

Wide-moat Otis Worldwide reported mixed fourth-quarter results, with organic revenue growth of 1.9% slightly ahead of FactSet consensus but service revenue and EBIT margin a touch lighter than our expectations. Management made no changes to its 2025 outlook for 2%-4% sales growth and continued margin improvement. With no changes expected to our forecasts, we maintain our $104 fair value estimate.

Wide-moat Otis delivered a resilient set of third-quarter results that featured ongoing strength in the service business, where organic sales advanced 7.7%, supported by a healthy order backlog for elevator modernizations and solid growth of the maintenance portfolio. New-equipment sales fell 8.2% organically in the quarter, driven by the ongoing fallout of China’s property market—in China, new-equipment sales dropped by more than 20% in the quarter. The group EBIT margin held steady at 16.9% in the quarter as a positive sales mix shift toward the high-profit-margin service business offset the weakening of new-equipment margins, which were affected by both lower volumes and unfavorable mix.

The resilience of wide-moat Otis’ installed base business model remained on display in the second quarter of 2024. Demand for new elevator installations remained weak, with orders for new equipment falling 11%, an unsurprising outcome given the immense pressure the Chinese property market remains under and construction activity in North America and Europe that remains cyclically weak. Nonetheless, elevator modernization demand remained strong in the second quarter, growing 14% year on year and delivering a much-needed offset to the ongoing weakness in new equipment markets. Accordingly, second-quarter organic sales eased by just 1% as the combination of the strong modernization revenue and solid growth in the maintenance portfolio—where portfolio service units grew some 4% year on year—drove solid 5% organic top-line growth for Otis’ service segment. The group EBIT margin strengthened 110 basis points in the second quarter to 17.0%, largely the result of improving unit economics for the service segment as its maintenance portfolio continues to grow, thereby aligning with our full-year expectations.

Otis Worldwide is the largest elevator and escalator original equipment manufacturer globally with integrated operations that span manufacturing and installation activities, as well as elevator and escalator servicing for existing installations. Additionally, Otis performs elevator modernization services for elevator systems at the end of a typical 15- to 20-year useful life. Otis estimates the global E&E market was worth about $80 billion in 2021 with Otis commanding an approximate 18% global market share, based on revenue.

Wide-moat Otis Worldwide delivered a solid first-quarter result, illustrating the resilience of the industry-leading elevator original equipment manufacturer’s installed base business model amid a still soft environment for construction activity and demand for new elevator installations. First-quarter sales grew 3.8% organically and adjusted EBIT rose 8.3% year on year as Otis’ high profit margin service segment performed strongly. Otis has consequently tightened its 2024 guidance range, now expecting to deliver 3%-5% organic sales growth in 2024 and operating profit in the range of $2.42 billion-$2.46 billion. We’ve tweaked our estimates in response to the first-quarter result and now forecast full-year 2024 EBIT of $2.45 billion and EPS of $3.99.

Otis Worldwide is the largest elevator and escalator original equipment manufacturer globally with integrated operations that span manufacturing and installation activities, as well as elevator and escalator servicing for existing installations. Additionally, Otis performs elevator modernization services for elevator systems at the end of a typical 15- to 20-year useful life. Otis estimates the global E&E market was worth about $80 billion in 2021 with Otis commanding an approximate 18% global market share, based on revenue.

Otis Worldwide’s 2024 investor day left us feeling confident that the wide-moat stock remains well positioned to capitalize on growth opportunities that exist for its all-important elevator service business—for both its maintenance portfolio and in elevator modernizations—and to weather the ongoing cyclical and structural challenges, which prevail in new elevator equipment markets globally. Otis left its medium-term financial targets largely unchanged, which broadly accords with our existing estimates. As a result, we don’t expect to make a material revision to our $98 fair value estimate.

Otis Worldwide’s fourth-quarter 2023 performance largely tracked our full-year expectations, with the wide-moat stock delivering full-year EBIT of $2.27 billion and EPS of $3.54, representing respective 6.7% and 11.7% year-on-year increases. Operating income growth was supported by organic sales growth of 5.6%, resulting from the ongoing robust growth of Otis’ service business—the group’s most important segment accounted for approximately 70% of group EBIT. The group full-year 2023 EBIT margin widened by 30 basis points to 16.0%, spurred largely by solid EBIT margin progression of the service segment with increased service volumes, improved productivity, and price increases all contributing. Elsewhere, Otis’ smaller new equipment segment treaded water in 2023, with its EBIT contribution of $381 unchanged year on year amid subdued new equipment demand.