Otis Worldwide

Methodology

Otis' elevator and escalator business generates highly predictable earnings from long-term service contracts on its massive installed base. New equipment sales fluctuate with construction cycles but service revenue provides stability. The calculation works well for this infrastructure service provider with exceptional recurring revenue visibility from maintenance contracts.

Methodology

Otis typically commands premium PEG ratios reflecting service contract stability, pricing power from captive maintenance customers, and modest growth from urbanization trends. While growth appears unexciting, the high-quality recurring revenue justifies valuations above typical industrial companies. Compare to historical ranges and infrastructure service providers rather than cyclical equipment manufacturers.

Methodology

Otis offers a meaningful dividend as management balances capital returns with service network investments. The dividend adds significant value to steady total returns from this infrastructure service provider. PEGY better captures why investors value Otis for combining predictable service revenue growth with reliable dividend income.