ac.jpg

Carrier Global Corporation Stock and Dividend Analysis

Carrier Global Corporation is a member of the prestigious dividend aristocrat list. One of the leading corporations that provide cutting edge technology in heating, air conditioning, and refrigeration, Carrier Global has been providing the world’s businesses and homeowners with dependable HVAC systems since 1902.  Willis Carrier, the founder of Carrier Global and nicknamed the father of air conditioning, was a pioneer in the air conditioning world as he first invented the slide rule conditioning system in 1881, which paved the way for the modern air conditioning systems.

Carrier Global Corporation 

Trading Price (08/06/2020): $28.27

Dividend Yield: 1.14%

Payout Ratio: 22.54%

Annual Dividend: $0.32

Payout Frequency: Quarterly 

Background Timeline

1881- William Carrier invents the slide rule, the circular machine that controlled dew points.

1902- William Carrier installs the first industrial air conditioning system at Sackett & Wilhelms printing press.

The textile industry widely adopts 1906- Carrier’s air conditioning.

1914- Air conditioning becomes a global phenomenon, and installations begin all over the world, along with the first successful residential air conditioning implementation.

1922- Carrier corporation develops the centrifugal chiller, which paved the way for large-scale comfort air conditioning.

1946- First air-conditioned bus was showcased in San Antonio, Texas.

1971- Carrier Global won the contract to provide cooling for Chicago’s Sears Tower

1979- United Technologies acquires Carrier  

2018- United Technologies and Raytheon merge, Carrier gets spun off as its own tradable company

Business Model 

Carrier Global Corporation operates in three main segments: HVAC, Refrigeration, and Fire & Security.

As a pioneer in air conditioning, Carrier was able to dominate the market for air conditioning. In 2020, their HVAC segment is made up of 20 smaller companies that operate under the Carrier name with core businesses ranging from R&Dto home installation. These companies provide air conditioning services in both the commercial and residential sectors. Currently, their HVAC system is well-positioned in the United States and globally as they rank number one for U.S. residential and number three globally. The novel COVID-19 virus had a very positive impact on Carrier’s commercial HVAC segment. As companies started to reopen, their filtration and conditioning system became a significant area of focus. Carrier seized on this opportunity by launching the “Carrier Healthy Building Program,” which aimed to upgrade commercial filtration and conditioning systems to reduce the impact of the virus on workers. Leveraging over 100 years of air conditioning expertise, Carrier’s healthy building plan brings in 21st-century technology and filtration technology to combat COVID-19. Their system includes automated air quality indexes along with a variety of machines that can filtrate dirty air no matter the size of the facility. 

Their residential HVAC subsector has launched products that are consistently ranked best in their category. The introduction of their newest residential HVAC system, called Infinity 26  is leading the race in energy efficiency, humidity control, and noise control. In addition to its cutting edge HVAC system, Carrier has recognized the importance of smart thermostats. The Nest thermostat pushed forth the creation of the Carrier smart thermostat. This thermostat allows the homeowner to control their climate and gain insights on their energy, spending all from their phone. Their efficient technology allows homeowners to save up to 23% in annual energy costs as the smart thermostat analyzes patterns and adjusts itself.

Carrier’s refrigeration segment is broken up into two categories: transport refrigeration and commercial refrigeration. 

Regardless of the mode of transportation, Carrier Global covers all aspects of the supply chain. Two of the most common global transportation methods are by road and sea freight. Both of these sectors are both dominated by Carrier as they rank number one for positioning

Their truck refrigeration technology reduces fuel consumption, emission, and sound levels while ensuring that the driver can continuously monitor and ensure that the items being transported are at optimal temperature levels. The sea freight uses the same technologies in order to monitor the air within containers and ensure that the goods are not damaged. As both of these sectors need to be continuously maintained, Carrier has over 600 locations that cater to these transportation sectors to ensure that companies can resolve any problems they might have with the equipment on time.  

Their fire and security sector is made up of 19 companies in order to ensure businesses and homes receive the best possible service. Many of these companies range in their specialization from emergency response teams to installation of industrial safety systems in commercial buildings. Like many other of their products, technology is heavily embedded in their systems. Companies or residential homeowners can track and monitor their system through simple to use and access systems. In this category, they have many safety systems ranging from fire, gas, and water mist suppression to alarm signaling and carbon monoxide detection.

Carr Foundations
Carr Foundations

(Investor Meeting, March 2020)

Financials

Carr Net Sales in 2017, 2018, and 2019
Carr Net Sales in 2017, 2018, and 2019

Carrier, before its spinoff in 2018, acted under United Technologies. Under the United Technologies leadership, Carrier was able to capture a significant market share of the American market and the world market. In the three most recent years, Carrier saw a steady increase and maintenance of its net sales. After 2018 when Carrier became its own tradeable company, there were increases in operational costs and thus resulted in lower profit margins. It should be noted that its standalone corporate expenses rose tremendously in 2019. In 2018, corporate expenses were $138 million, but in 2019 they jumped to $201 million, which concluded 2019 with a profit margin of 14.2% down from 19.2% in 2018. 

Conclusion 

Carrier Global Corporation has a meager dividend yield, but that should not stray away from Carrier’s potential. As a new standalone company, it will require a bit more capital to get things off the ground and act as an independent entity. Its history and technology are pristine examples of what leading market companies can achieve. Ever since its inception over 100 years ago, Carrier Global positioned itself as number one for many of its products throughout the world. To give a holistic view, since it became a tradable company, Carrier Global’s stock price has grown over 145%. 

Ratings

TD Ameritrade: Accumulate

CFRA: 4/5 

Written by: Armand Bogdan
Published on: Saturday, August 8, 2020 4:00 PM

Reach your dividend goals