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United Technologies Stock Paints An Ugly Picture For Industrials

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United Technologies Stock Paints An Ugly Picture For Industrials
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United Technologies Corporation (NYSE: UTX) stock may have to be looked at by more analysts and investors as a "tell" of things to come for the market.

The stock peaked in April of this year, failed to eclipse that high on its first test in June and has gotten crushed since then, relatively speaking. It declined from $120 earlier this year to $99.17 (Wednesday's close). Perhaps more noteworthy, however, is the fact that there still may be more downside ahead of the stock before it's all said and done.

A Bird's Eye View Of Fundamentals:

  • The bears are quick to point out that despite the low headline price-to-earnings of 13, the stock is not cheap when one considers the minuscule revenue and EPS growth projections of 3.7 percent and 8.2 percent, respectively.
  • Aside from that, however, the bulls seems to have the majority of bullet points in their favor: The price-to-book of 2.71, the price-to-sales of 1.43 and the fact that the enterprise value easily trumps the market capitalization of the stock all indicate the stock is a good value.
  • The company earns positive levered free cash flow of $4.39 billion annually off of $64 billion in sales and roughly 9 percent net profit margins. The balance sheet is fairly healthy with a debt-to-equity ratio of 56.8 percent and a ratio of 1.22. The company pays a Treasury-beating 2.4 percent annual dividend yield.

What Do The Charts Say?

Technicians note that shares appear to be in a massive "ABC" downside correction with an eventual target of $91.87 based purely on Fibonacci projections. If the stock does make it down to that level, they also note that the long-term uptrend line for the stock will have been violated. Hopefully for the bulls, they note, the stock will touch the projected target on a daily basis and then race back up above the uptrend line on a weekly/monthly closing basis. If that played out, despite the short-term misery, the stock would still be technically healthy in the long-term.

Short-term resistance for the stock comes in at $103.79 and $106.21. Wednesday's low of $97.30 is short-term support and is followed up by the projected target at $91.87.

Stock chart: 
Stock chart

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