Conglomerates aren't always the best at responding to the needs of individual businesses within the group; sometimes, it simply makes more sense to reinvest cash flow in more promising businesses. Given that spin-outs can often outperform once they're out on their own and can make their own decisions (it's a phenomenon that Peter Lynch talked about a lot). Investors in Otis Worldwide (OTIS) should hope that's the case, as the company looks as though it needs to make up for some lost time and opportunities.
To be clear, Otis isn't a bad business. It's my opinion, though, that the company has been surpassed by rivals like KONE (OTCPK:KNYJY) and Schindler (OTC:SHNDY) in areas like digitalization and in the faster-growing Chinese market. Valuation already looks pretty healthy here, but that's not uncommon in the space.
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Otis Needs To Fill A Few Gaps But Has Meaningful Modernization Leverage
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