Otis Worldwide Corporation (OTIS) Intrinsic Value & DCF Valuation
Industrial - Machinery · NYSE
Current Price
$74.19
Intrinsic Value
$94.45
+21.4% margin of safety
What Is Otis Worldwide Corporation's Intrinsic Value?
As of 2026-10-27, the base-case DCF model estimates the intrinsic value of Otis Worldwide Corporation (OTIS) at $94.45 per share, compared with a market price of $74.19, a margin of safety of +21.4%. The base case assumes 9.5% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $74.94 to $116.9. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Otis Worldwide Corporation (OTIS) Undervalued?
At $74.19, OTIS trades about 21.4% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Global Service Network
Otis maintains an extensive global service network, enabling efficient maintenance and repair of its elevators. This widespread presence creates high switching costs for building owners.
↑Brand Reputation and Trust
The Otis brand is synonymous with elevator reliability and safety, built over decades of operation. This strong reputation fosters customer loyalty and commands premium pricing.
↑Installed Base and Recurring Revenue
A vast installed base of elevators generates significant recurring revenue from service contracts. This predictable income stream supports ongoing R&D and operational investments.
INVESTMENT RISKS
↓Supply Chain Disruptions
Global supply chain issues can impact the availability and cost of critical components for elevator manufacturing and repair. This could lead to production delays and increased expenses.
↓Economic Downturns
Recessions can significantly reduce new construction and building upgrades, directly impacting elevator sales and service demand. This cyclicality poses a threat to revenue growth.
↓Regulatory and Compliance Changes
Evolving safety standards and building codes across different regions require continuous adaptation and investment. Non-compliance can lead to fines and reputational damage.
Base case
OTIS base case valuation
Intrinsic Value
$94.45
Margin of safety
+21.4%
Expected annual return
+4.9%
Base case assumptions: 9.5% annual growth, 10.0% discount rate, 16.56x exit multiple, 5 year projection. Data as of 2026-10-27.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the OTIS valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Otis Worldwide Corporation respond.
Open DCF Calculator for OTISCompany Overview
Otis Worldwide Corporation is a global leader specializing in the manufacturing, installation, and servicing of elevators and escalators, with significant operations in the United States, China, and numerous other international markets. The company's business is organized into two primary divisions: New Equipment and Service. Its New Equipment segment is responsible for the design, fabrication, sale, and fitting of a diverse array of passenger and freight elevators, escalators, and moving walkways, catering to residential and commercial properties, as well as large-scale infrastructure endeavors. Conversely, the Service segment offers extensive maintenance, repair, and modernization services aimed at upgrading existing elevator and escalator systems. Otis maintains a substantial global service footprint, employing approximately 34,000 service technicians across roughly 1,400 branches and offices. The company, established in 1853, is headquartered in Farmington, Connecticut.
Financial Metrics — OTIS Stock Valuation Data
Revenue/Share (TTM)
$38.71
FCF/Share (TTM)
$4.44
ROIC (TTM)
39.8%
ROE (TTM)
-28.0%
P/FCF
16.5x
EV/EBITDA
14.3x
FCF Yield
6.04%
Debt/Equity
n/m
On a trailing twelve-month basis, OTIS generates free cash flow per share of $4.44 alongside a ROIC of 39.8%, both central inputs for a DCF valuation. Its P/FCF ratio of 16.5x and FCF yield of 6.04% then frame how OTIS is priced against peers on a cash flow basis.
Frequently Asked Questions
What is the intrinsic value of OTIS?
Otis Worldwide Corporation currently generates $4.44 in free cash flow per share. At the current price of $74.19, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is OTIS undervalued?
OTIS trades at a P/FCF ratio of 16.5x with a free cash flow yield of 6.04%. This P/FCF is in a moderate range. However, whether OTIS is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value OTIS stock using DCF?
To perform a DCF valuation on Otis Worldwide Corporation: (1) Start with the trailing free cash flow per share ($4.44) as the base, (2) project future FCF growth over 5-10 years based on Industrial - Machinery industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting OTIS's risk profile — with a debt-to-equity of -1.54x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to OTIS?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Otis Worldwide Corporation, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Industrial - Machinery trends, then discounting those amounts to today's dollars. OTIS's ROIC of 39.8% reflects how efficiently the company converts invested capital into profit.
How does WACC affect OTIS stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For OTIS, with a debt-to-equity ratio of -1.54x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 14.3x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See OTIS PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Industrials valuationsDCF and P/E value OTIS with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-10-27. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.