Good evening traders
Carrier's orders were up about 40% in the second quarter, per the company, and its adjusted operating profit still fell 6%.
I bought it for the long-term portfolio this week. It closed Thursday at $56.48, 30.0% under its July 2025 closing high of $80.73.
① The quarter
→ Sales: $6,351 million, up 4% from $6,113 million.
→ Adjusted margin: 17.2%, from 19.1%, mainly higher input costs and a less favourable mix.
→ Adjusted EPS: $0.86, down 7% from $0.92.
→ The guide: raised to about $23 billion in sales and about $2.90 EPS, from about $22 billion and about $2.80.
② The check
What did an extra dollar of sales earn?
→ Sales change: +$238 million.
→ Profit change: -$71 million.
→ Profit change over sales change: about -30%. Each extra dollar lost about 30 cents.
→ The yardstick: last year's margin was 19.1%, so if growth were as profitable as the business already is, an extra dollar would earn about 19 cents.
A number below the usual margin says growth is costing more than it brings.
③ What I'm watching on 29 October
→ Profit against orders. If the orders are turning into margin, that number should climb back above the margin.
→ The cash. First-half free cash flow was $795 million, down about 20% from $988 million. The company guides about $2 billion for the year, so the second half has to bring in about $1.2 billion (my calculation).
Carrier reports on Thursday 29 October at 7:30am ET.
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Education, not financial advice or a recommendation. Company figures are from Carrier's second-quarter 2026 release. Past performance doesn't guarantee future results.