Otis Worldwide Corporation (OTIS) Stock Valuation — DCF Analysis
Industrial - Machinery · NYSE
Current Price
$72.29
Intrinsic Value
$102.03
+29.1% margin of safety
COMPETITIVE MOAT
↑Skilled Labor Demand
High demand for skilled elevator mechanics, with potential earnings exceeding $150,000, creates a barrier to entry for new competitors. Otis's ability to attract and retain this specialized workforce is a significant advantage.
↑Modernization Services
Otis offers new commercial escalator modernization packages, including preassembled modules. This streamlines installation and improves safety, providing ongoing revenue streams and customer lock-in.
↑Global Service Network
A vast global network for installation and maintenance of elevators and escalators creates significant switching costs for customers. This established infrastructure is difficult for rivals to replicate.
INVESTMENT RISKS
↓China Market Headwinds
The company faces significant headwinds in the Chinese market, which has impacted its share price. A prolonged slowdown or further regulatory changes in China could continue to pressure performance.
↓Share Price Volatility
Otis's share price has experienced substantial declines, indicating investor concerns and market sensitivity. This volatility can deter new investment and impact capital raising efforts.
↓Talent Acquisition Challenges
Despite high earning potential, the CEO notes difficulty in hiring enough skilled elevator mechanics. This labor shortage could constrain growth and impact service delivery.
Base case
OTIS base case valuation
A base case discounted cash flow model for OTIS estimates an intrinsic value of about $102.03 per share, against a current price of $72.29. The model assumes 11.6% annual free cash flow growth, a 10.0% discount rate, and a 17x exit multiple.
Intrinsic Value
$102.03
Margin of safety
+29.1%
Expected annual return
+7.1%
Base case assumptions: 11.6% annual growth, 10.0% discount rate, 17x exit multiple, 5 year projection. Data as of 2026-06-15.
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)
$37.74
FCF/Share (TTM)
$4.30
ROIC (TTM)
45.6%
ROE (TTM)
-27.1%
P/FCF
16.6x
EV/EBITDA
14.4x
FCF Yield
6.01%
Debt/Equity
n/m
Based on trailing twelve-month data, OTIS shows a free cash flow per share of $4.30 and a ROIC of 45.6%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 16.6x and FCF yield of 6.01% are important context metrics when evaluating OTIS's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of OTIS?
Otis Worldwide Corporation currently generates $4.30 in free cash flow per share. At the current price of $72.29, 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 16.6x with a free cash flow yield of 6.01%. 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 ($4.30) 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 -1.45x, 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 45.6% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
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 -1.45x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 14.4x, 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 2026-06-15. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.