Otis Worldwide (OTIS) · Q2 2026 results and valuation

At 1.8% growth a year (3-year revenue growth), the model's fair value is $34.37 a share — the stock trades 125% above it. Today's price assumes 10.4% growth a year.

1. Key theme

   Service revenue growth is expected to drive sustained margin recovery in coming quarters.

   Source quote

   “Starting on slide three, we achieved significant top-line growth as we delivered a solid quarter with a significant step-up in organic... We hope everyone listening is safe and well. Service remains the key growth engine of the business, with 9% organic sales growth supported by 24% modernization growth, double-digit repair growth, and accelerating maintenance trends....”

2. Key theme

   Otis Worldwide delivered another quarter of strong cash generation with adjusted free cash flow of $290 million, up 19% year-over-year.

   Source quote

   “We delivered another quarter of strong cash generation with adjusted free cash flow of $290 million, up 19% year-over-year. While orders were down 5% in the quarter, backlog increased 4% at constant currency and the business is showing greater stability, supported by a sales turnaround in the Americas at a robust 10% growth. The strength of our cash flow reflects the resilience of our business model.”

3. Guidance

   Otis expects sustained margin recovery in the coming quarters due to continued growth in service revenue.

   Source quote

   “With continued service revenue growth, we expect a sustained recovery in margins in the next quarters.”

4. Guidance

   Otis reported that productivity and cost headwinds were higher than anticipated this quarter, which impacts the company's projected costs.

   Source quote

   “Productivity and cost headwinds were higher than we anticipated this quarter.”

Management sounded noticeably less positive answering analysts than in its prepared script — a bigger drop than in 91% of calls. Scripts are polished in advance; a drop under questioning often marks the topics analysts pressed on, so the answers deserve a closer read than the script.

Sentences that drove the tone

“Ramp up top-line growth by converting the robust modernization backlog, coupled with our strong growth momentum in repair, capture the flow-through of our micro-pricing initiatives, improve service quality to strengthen...”

“Providing some color on the third quarter, we expect service organic sales to remain strong at mid-single-digit growth, mainly driven by repair and modernization that will continue to grow on...”

“Growth was supported by a strong customer demand and execution against a robust backlog, which continues to be driven by ongoing orders growth.”