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US Equities · Finance research note

CARR — Carrier Global

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 6.57%
Profit Margins 5.99%
Return on Equity 9.91%
Return on Assets 3.15%
Free Float 0.79B
Dividend Yield 1.30%
Short Int % Utilisation 2.47%

2.2 Growth

Metric Value
Revenue Growth 2.4%
Free Cash Flow 0.85B
EBITDA 21.65 (Ratio)
Enterprise Value 68.01B
EV/Revenue 3.11
EV/EBITDA 21.65

Revenue growth of 2.4% suggests mature or challenged top-line momentum.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 4.02%
Risk / Std Dev (Ann.)* 36.15%
1-Year Price Return* -2.53%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $62.78
52-Week Range $50.24 – $76.76
Observation Count 250 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in US$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2025 FY2024
Revenue Reported revenue $21.75B $22.49B
Net income Reported net income $1.48B $5.60B
Total assets Year-end reported balance $37.19B $37.40B
Shareholders’ equity Year-end reported balance $13.80B $14.08B
Net margin Net income ÷ revenue 6.82% 24.92%
Asset turnover Revenue ÷ total assets 0.5848x 0.6012x
Equity multiplier Total assets ÷ shareholders’ equity 2.6941x 2.6563x
ROE Net margin × asset turnover × equity multiplier 10.75% 39.80%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $21.75B
Prior annual revenue $22.49B
EBIT $2.26B
Tax rate 13.35%
NOPAT = EBIT × (1 − tax rate) $1.95B
Forecast start-growth basis -3.29%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $1.95B
Add: depreciation & amortisation $1.27B
Less: capital expenditure -$392.00M
Less/(add): working-capital cash-flow movement -$398.00M
Current unlevered FCFF $2.44B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 -3.29% $1.89B $1.23B -$379.12M -$384.92M $2.36B $2.25B
2 -1.84% $1.86B $1.21B -$581.47M -$377.84M $2.11B $1.82B
3 -0.39% $1.85B $1.20B -$787.69M -$376.35M $1.89B $1.48B
4 1.05% $1.87B $1.22B -$1.01B -$380.32M $1.70B $1.21B
5 2.50% $1.91B $1.25B -$1.25B -$389.82M $1.52B $984.43M

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 1.31
Cost of equity 11.91%
Pre-tax cost of debt 3.66%
WACC 10.21%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $20.26B
Implied terminal EV / EBITDA 5.86x
Terminal value as % of enterprise value 61.68%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $7.74B
Present value of terminal value $12.46B
Indicated enterprise value $20.20B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $20.20B
Less: gross interest-bearing debt $12.25B
Add: cash and equivalents $1.55B
Add: affiliate investments $0.00
Less: minority interests $324.00M
Indicated common equity value $9.18B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 862,400,000.00
Share-count basis reported diluted weighted-average shares
Current market price $61.18
DCF indicative value per share $10.65
Indicative value vs. market price -82.60%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 3/4 evidenced checks
Lynch-inspired balance-and-growth checks 3/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:25:40.616869 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha -16.78% -3.65%
Adjusted R² 0.25 0.29
Annualised residual volatility 30.76% 29.64%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 1.26 (6.96) 1.60 (7.97)
Size (SMB) 0.53 (2.15) 0.36 (1.40)
Value (HML) 0.49 (2.33) -0.07 (-0.27)
Profitability (RMW) NM 0.35 (1.65)
Investment (CMA) NM 1.20 (3.24)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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