I have been looking at companies in the HVAC sector for some time now, as it is a sector that in my opinion still has a lot to offer. Just the data I'm going to provide you with today will convince you that you should give this and other companies some space.

Company introduction 👇

Carrier Global Corp was formed in April 2020 when it spun off from its parent company United Technologies Corp and became a separate company. Carrier Global Corp focuses on the manufacture and sale of air conditioning, smart thermostats and cooling and heating systems for industrial and commercial applications.

In terms of stock trading, Carrier Global Corp shares began trading on the New York Stock Exchange (NYSE) in May 2020 under the symbol $CARR, where the stock price has increased more than 250% year-to-date.

Some of their top products include refrigeration units, air conditioners, temperature and humidity control systems, pumps, and other energy saving devices (smart thermostats).

Carrier Global Corporation's competitive advantage lies primarily in its innovative HVAC and refrigeration technologies and solutions that are energy efficient and reduce building operating costs. In addition, the company has a strong brand and a long history in this area, which allows it to be a well-known and respected company in the industry.

Further, Carrier strives to provide excellent customer support and service, including advice, service and maintenance, which creates a strong relationship with customers and leads to repeat purchases and referrals of the brand to other potential customers.

As you can see in the chart, the company's revenue comes largely from the US, but it is not entirely dependent on this region, which is good, the next major market for the company is Europe and then Asia.

Let's take a look at the numbers now 👇

Sales for the last 3 years 👇

• 2022 = $20.421B, a slight decrease of 0.93% from 2021.
• 2021 = $20.613B, an increase of 18.09% from 2020.
• 2020 = $17.456B, a decrease of 6.19% from 2019.

Net profit for the last 3 years 👇

• 2022 = $3.534B, an increase of 112.38% from 2021.
• 2021 = $1.664B, a decrease of 16.04% from 2020.
• 2020 = $1.982B, a decrease of 6.33% from 2019.

Long-term debt 👇

• 2022 = $8.702B, a decrease of 8.53% from 2021.
• 2021 = $9.513B, a decrease of 5.21% from 2020.
• 2020 = $10.036B, an increase of 12139.02% from 2019 when the debt was virtually negligible.

🚨 The reason for the jump from 2019 to 2020 was the acquisition of EZSTL, a company that specializes in the development and manufacture of refrigeration systems. However, despite its size, the debt has been slowly decreasing since then.🚨

Free cash flow 👇

• 2022 = $1.39B, which was a 26.57% decrease from 2021.
• 2021 = $1.893B, which was a 37.17% increase from 2020.
• 2020 = $1.38B, which was a 24.18% decrease from 2019.

''Cash on Hand'' - Cash 👇

• Carrier Global's cash on hand for 2022 was $3.52B, which was a 17.84% increase from 2021.
• Carrier Global's cash for 2021 was $2.987 billion, a decrease of 4.11% from 2020.
• Carrier Global's 2020 cash was $3.115 billion, an increase of 227.21% from 2019.

Assets

• Carrier Global's total assets for 2022 were $26.086 billion, a decrease of 0.33% from 2021.
• Carrier Global's total assets for 2021 were $26.172 billion, an increase of 4.3% from 2020.
• Carrier Global's total assets for 2020 were $25.093 billion, an increase of 11.99% from 2019.

Accounts payable and receivable

• 2022 = $18.01B, a decrease of 5.6% from 2021.
• 2021 = $19.078B, an increase of 3.04% from 2020.
• 2020 = $18.515B, an increase of 132.28% from 2019.

In terms of P/E, CARR is below the sector average, while P/S and P/B are slightly above the sector average, but these are still attractive values.

However, I really like the numbers on ROA, ROE and ROI, as well as the good numbers on margins, where the company has a noticeable edge over most of its competitors.

Latest quarterly results and outlook for 2023 👇

Q4 2022 highlights

• Revenue of $5.1 billion, down 1% from 2021, including 5% organic growth
• GAAP EPS of $0.32 and adjusted EPS of $0.40
• Net cash flow from operating activities of $1.1 billion and free cash flow of $983 million

Best of full year 2022

• Revenue of $20.4 billion, down 1% from 2021, including 8% organic growth
• GAAP EPS of $4.10 and adjusted EPS of $2.34
• Net cash flow from operating activities of $1.7 billion and free cash flow of $1.4 billion

Outlook for 2023

• Revenue of $22 billion with low to mid single-digit organic growth
• Adjusted earnings per share of $2.50 to $2.60, high to low double digits
• Free cash flow* of $1.9 billion

Where is the potential for this company and the sector in general in terms of growth?

''Smart Buildings''

The smart buildings and HVAC sector has huge potential for growth in the long term. Increased demand for smart buildings stems mainly from growing awareness of energy efficiency and sustainability, increasing reliance on technology and changes in the ways people work, live and work.

As climate change becomes more prevalent, the pressure to reduce greenhouse gas emissions is increasing. HVAC smart buildings can help reduce energy consumption and CO2 emissions by optimising heating, cooling and ventilation of spaces in real time.

The growth of the smart building sector will also be supported by technological advances that enable increasingly sophisticated and efficient HVAC systems, including the use of artificial intelligence and machine learning.

Another factor contributing to the growth of this sector is the growing urban population and increasing demands for intelligent building and HVAC controls. The United Nations estimates that the urban population will increase to 68% of the world's total population by 2050, which means an increased need for smart buildings that can better manage space, energy and resources.🚨

Smart thermostats

The fact remains that smart thermostats are generally under-used and will certainly be needed and highly demanded by mainstream households in the future as part of reducing energy (heating and air conditioning) costs.

🚨Statistics states that the US smart thermostat market alone is expected to grow to $3.66 billion from 2022-2029, a CAGR of 17.2%.🚨

• That's a pretty good point, knowing that CARR is one of the dominant players, pushing these technologies further and further in innovation.

Does that seem low to you?

Oh well, let's take a look at the bigger picture and where the company's roots are embedded 👇

You can find their innovative and brilliantly engineered thermostats, heating systems and air conditioners literally everywhere - data centres, education, hospitals, even at major sporting events like the Olympics and World Cups, or on ships, hotels, as well as mining companies... Read more about this here - Global Leaders in Innovation | Carrier Corporate

When I wrote to you about this company 5 months ago, Morgan Stanley had a target price of $44, which was easily met - link to article - Morgan Stanley highlights 3 stocks to buy that will benefit from the climate bill | Bulios

In the article, I also stated at the end:

''I see the most potential in the medium term in CARR, where I wouldn't be afraid to buy a little now (my opinion).''

Of course this is not a miracle pick or success, but whoever bought at that time is at such +13% after 5 months.

At this point, analysts remain bullish and see a target price in the range of $47-55 per share, which in my opinion can be met within the next few years with ease. Unfortunately, I think that despite the attractive results, focus and technology, the company is slightly overvalued, so it is currently only part of my watchlist, but one that it could quickly get out of during a potential downturn :-)

Please note that this is not a financial advisory. Every investment must go through a thorough analysis.