- Wondering if Carrier Global at around US$61.91 is offering fair value or if you are paying too much for its future potential? This article walks through the numbers in plain language so you can judge for yourself.
- Over shorter timeframes, the stock shows returns of 0.4% over 7 days, 14.1% over 30 days, 15.7% year to date and 3.8% over the past year, while the 3 year and 5 year returns sit at 56.8% and 52.2% respectively.
- Recent coverage of Carrier Global has focused on its role in building products and climate control solutions, with investors paying attention to how its positioning in these markets relates to expectations baked into the share price. News around the broader construction and infrastructure space has also framed Carrier Global as a stock to watch when thinking about long term themes.
- Despite this attention, the company currently has a valuation score of 1 out of 6. The next sections will compare different valuation approaches, and then finish with a broader way to think about what that score really means for long term investors.
Carrier Global scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Carrier Global Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model takes estimates of the cash a business could generate in future and works backwards by discounting those cash flows to today, giving an estimate of what the entire company might be worth right now.
For Carrier Global, the latest twelve month free cash flow sits at about $2.05b. Analysts and extrapolated estimates point to projected free cash flows between 2026 and 2035 that stay in the low to mid single digit billions each year, with 2035 projected at around $4.04b. These figures are based on a 2 Stage Free Cash Flow to Equity model, where analysts provide inputs for earlier years and Simply Wall St extends that pattern further out.
Bringing those future cash flows back to today gives an estimated intrinsic value of about $61.29 per share. Against a recent share price around $61.91, the model implies the stock is roughly 1.0% overvalued, effectively suggesting it is trading very close to this particular estimate of fair value.
Result: ABOUT RIGHT
Carrier Global is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.
Approach 2: Carrier Global Price vs Earnings
For profitable companies like Carrier Global, the P/E ratio is a common way to think about value because it links what you pay for each share to the earnings that share currently generates. A higher or lower P/E can often reflect what the market expects for future growth and how much risk investors are willing to accept.
Broadly, higher growth expectations or lower perceived risk can support a higher P/E, while slower expected growth or higher risk usually go with a lower P/E. Carrier Global currently trades on a P/E of 35.55x, compared with the Building industry average of about 22.23x and a peer group average of 70.01x.
Simply Wall St’s Fair Ratio for Carrier Global is 34.81x. This Fair Ratio is a proprietary estimate of what a “normal” P/E could look like for the company, based on factors such as earnings growth, profit margins, industry, market cap and risk profile. Because it is tailored to Carrier Global’s own characteristics, it can be more useful than a simple comparison with peers or the industry alone.
The current P/E of 35.55x is very close to the Fair Ratio of 34.81x, suggesting the market price is in line with this multiple based view of value.
Result: ABOUT RIGHT
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 18 top founder-led companies.
Upgrade Your Decision Making: Choose your Carrier Global Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so this is where Narratives come in as a simple way for you to attach a clear story about Carrier Global to the numbers you see on screen, linking your view of its business, revenue, earnings and margins to a forecast and then to a fair value that you can compare with the current share price.
On Simply Wall St’s Community page, Narratives are an easy tool used by millions of investors that let you pick or adjust assumptions, see how that flows through to future estimates and fair value, and then decide whether the gap between fair value and price suggests Carrier Global looks expensive or cheap based on your view.
Narratives update automatically when new information such as earnings or news is added, so your story and fair value stay aligned with the latest data instead of being stuck in an old spreadsheet.
For example, one investor might choose a Narrative close to the higher analyst fair value around US$89.13 that leans on data center cooling demand, European heat pumps and aftermarket growth, while another might choose a more cautious Narrative nearer US$55.00 that focuses on concentrated data center customers, weaker residential demand and pressure on some regional margins. Both can quickly see how their chosen story lines up against Carrier Global’s current market price.
For Carrier Global however we will make it really easy for you with previews of two leading Carrier Global Narratives:
Each one links a clear story about the business to specific assumptions on revenue, margins and valuation so you can see which version lines up better with your own view.
Fair value used in this narrative: US$71.03 per share.
Gap between this fair value and the recent price of about US$61.91: roughly 12.8% below the narrative fair value.
Analyst revenue growth assumption in this narrative: about 3.86% per year.
- Focuses on data center cooling, sustainable energy solutions and the Viessmann acquisition as key drivers for future revenue and market share.
- Builds in higher profit margins over time, supported by aftermarket services, cost efficiency programs and product differentiation.
- Uses an analyst consensus price target around US$71 based on expectations for earnings, margins and a future P/E that remains above the current US Building industry average.
Fair value used in this narrative: US$55.00 per share.
Gap between this fair value and the recent price of about US$61.91: roughly 12.6% above the narrative fair value.
Analyst revenue growth assumption in this narrative: about 3.35% per year.
- Highlights concentration risk in data center cooling customers, softer residential demand and inventory issues that could keep margins uneven.
- Assumes earnings growth but pairs it with a lower future P/E multiple of 18.2x, below the US Building industry level used in the narrative.
- Anchors on a bearish price target of US$55 that sits at the low end of the analyst range, with the view that the current share price already reflects generous expectations.
Do you think there's more to the story for Carrier Global? 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.
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