CARR - Carrier Global: Transformation To Exploit HVAC Trends

2024-03-27 06:49:20 ET

Summary

• Carrier Global’s organic revenue trajectory has been strong, at a time when CARR is transforming its portfolio. It is becoming a pure-play HVAC business and selling over $5b of its portfolio.
• We are supportive of the approach, owing to tailwinds benefiting the HVAC segment, albeit have challenged specific decisions. Realistically, it will take many years to assess the success of this.
• CARR appears primed for margin improvement and a small step-up in growth rate to MSD/HSD, which could allow for considerable shareholder returns with distributions.
• We do not believe CARR’s current valuation allows sufficient margin of error to make this an attractive business. We suggest investors remain patient and monitor progress.

Introduction and thesis

Carrier Global Corporation ( CARR ) is a leading provider of heating, ventilation, and air conditioning (HVAC), refrigeration, fire, security, and building automation technologies. The company operates globally and serves both residential and commercial markets. With a history dating back over a century, Carrier has established itself as a pioneer in climate control solutions.

We are positive about the future outlook of CARR. The company is transitioning to a pure-play HVAC business, which positions it to maximize returns from industry tailwinds. Investors are equally positive, with a considerable share price run since 2020....

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