• If you have been wondering whether Otis Worldwide stock is attractively priced or just fairly valued at around US$76.71, the key is to look closely at what the current valuation actually reflects.
• Over the last week the stock is roughly flat with a 0.1% return, while the 30 day return of a 1.8% decline and the 1 year return of a 19.7% decline hint that sentiment around the long term story has shifted.
• Recent coverage has focused on how elevator and escalator demand ties into broader construction trends, which has kept attention on Otis Worldwide as investors reassess long term capital spending in commercial and residential projects. There has also been interest in how service contracts and modernization work might support more stable cash flows compared to equipment sales during slower building cycles.
• Even after a 13.2% decline year to date and a 5.6% decline over 3 years, Otis Worldwide currently holds a value score of 6/6. Next up is a look at how different valuation methods line up on this score and whether a broader way of thinking about value at the end of the article changes the picture.

Approach 1: Otis Worldwide Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model projects a company’s future cash flows and then discounts those back to today to estimate what the business might be worth right now based on those projected cash streams.

For Otis Worldwide, the latest twelve month free cash flow is about $1.67b. The DCF here uses a 2 Stage Free Cash Flow to Equity approach, with analyst inputs feeding into near term projections and further years extrapolated from those estimates. For example, projected free cash flow for 2030 is $2.47b, and the model includes a detailed path of annual cash flows between 2026 and 2035 that are all discounted back to today in dollars.

Bringing these cash flows together, the model arrives at an estimated intrinsic value of $102.33 per share. Compared with the current share price of about $76.71, the DCF output suggests Otis Worldwide trades at around a 25.0% discount to this intrinsic estimate, indicating the stock appears undervalued on this cash flow view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Otis Worldwide is undervalued by 25.0%. Track this in your watchlist or portfolio, or discover 44 more high quality undervalued stocks.

Approach 2: Otis Worldwide Price vs Earnings

For a profitable company like Otis Worldwide, the P/E ratio is a straightforward way to see how much investors are paying for each dollar of earnings. It lets you compare the stock with similar businesses and with the wider Machinery industry using the same earnings yardstick.

What counts as a “normal” P/E often reflects how the market sees a company’s growth potential and risk profile. Higher expected growth and lower perceived risk can support a higher P/E, while slower growth or higher risk usually point to a lower multiple.

Otis Worldwide currently trades on a P/E of 19.87x, compared with the Machinery industry average of 28.02x and a peer group average of 32.15x. Simply Wall St’s Fair Ratio for Otis Worldwide is 26.88x. This is its proprietary estimate of what the P/E might be given factors such as earnings growth, industry, profit margins, market cap and risk. This Fair Ratio can be more informative than a simple industry or peer comparison because it adjusts for those business specific features rather than assuming all companies deserve the same multiple.

Since the current P/E of 19.87x is below the Fair Ratio of 26.88x, the stock screens as cheaper than this tailored benchmark.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Otis Worldwide Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives are introduced here as your way to attach a clear story to the numbers by linking your view of Otis Worldwide’s future revenue, earnings and margins to a forecast, a Fair Value, and then a simple comparison with today’s share price. All of this is done within the Narratives tool on Simply Wall St’s Community page, where different investors may see the same company very differently. For example, one investor might lean toward the more cautious Fair Value of about US$77.00 that lines up with lower revenue growth and a 19.8x future P/E. Another might lean toward the higher Fair Value of about US$120.00 that reflects stronger growth and a 23.5x future P/E. Each Narrative updates automatically when new earnings or news arrive so you can quickly see whether, on your numbers, Otis Worldwide looks closer to a buy, a hold or a sell decision point.

Do you think there's more to the story for Otis Worldwide? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.