Otis Worldwide

Otis Worldwide is the world's largest maker and servicer of elevators and escalators, spun off from United Technologies in April 2020. It splits its business into two segments. New Equipment designs, manufactures, sells, and installs new elevators and escalators, mostly for real estate developers, contractors, and government infrastructure projects; in 2025 it made up 35% of net sales but only 9% of segment operating profit.

Service performs maintenance, repair, and modernization on elevators already installed, including units originally made by other manufacturers; it made up 65% of 2025 sales but 91% of segment operating profit, and every new unit Otis installs becomes a candidate for a future maintenance contract. Otis maintains a portfolio of about 2.5 million units worldwide, the largest maintenance base in the industry, which gives it a recurring, high-margin revenue stream that is hard for a new entrant to match. Otis operates in more than 200 countries and territories, with about 71% of 2025 sales coming from outside the United States.

China, once a large source of new elevator orders, has kept shrinking as a share of new equipment demand since 2023, so Otis has been shifting its China business toward service contracts instead. In April 2026, Otis took a majority stake in WeMaintain, a Paris-based elevator service company that uses IoT sensors and AI to plan maintenance. WeMaintain continues to run as an independent business alongside Otis's own service network.

The market is pricing in two worries about Otis: labor and training costs squeezing Service margins, and a shrinking New Equipment market in China. Otis cut its 2026 profit guidance twice, in April and again in July. In July, management said that newly hired mechanics took longer to become productive than planned. Investor uncertainty grew further when CEO Judy Marks announced her retirement in September 2026, with no successor named yet.

The gap can close if margin pressure eases as recently hired mechanics finish training. Later quarters should start to show this. It also needs modernization sales, up 24% organically in Q2 2026 with a backlog 26% higher at constant currency, to keep converting into revenue regardless of what China's new-equipment market does. A smooth, well-communicated CEO transition would remove a second source of uncertainty.

Otis reports third-quarter 2026 results on October 28, 2026. This is the next test of whether margins are stabilizing. The board expects the new CEO to start in the first half of 2027, and Marks retires on July 31, 2027 at the latest. If margins stabilize and a strong successor starts within that window, the discount can close over the next three to five quarters.

If China keeps shrinking or a third guidance cut follows, the stock could stay cheap well into 2027.

1. Oct 28, 2026Pending

   Q3 2026 results: Service margin and 2026 guidanceA Service margin above the Q2 2026 level of 23.2% and adjusted EPS guidance of $4.01 to $4.05 kept pass; a lower Service margin or a third guidance cut fails.
2. Jan 2027 · est.Pending

   Full-year 2026 results and 2027 outlookA 2027 outlook with adjusted EPS growth and higher Service margins passes; flat or lower EPS guidance or more China weakness fails.
3. Jul 31, 2027Pending

   New CEO starts before Judy Marks retiresA successor who starts by July 31, 2027, Marks's latest retirement date, ideally in the first half of 2027, with a clear plan passes; no successor by that date or a disruptive change in strategy fails.

Every passed and failed checkpoint across all picks

Otis has negative equity: a total equity deficit of $5.6 billion at June 30, 2026. It took on debt at its 2020 spin-off from United Technologies and has bought back shares since then, but this is not a sign of distress. Read more

• Otis cut its 2026 profit guidance twice, in April and July 2026, as labor inflation, materials costs, and the time needed to train newly hired mechanics have pressured Service margins (adjusted operating margin fell 180 basis points in Q2 2026). If these cost pressures do not ease, profit growth will stay muted even as sales grow.
• China, once a major source of new elevator orders, has kept shrinking: New Equipment orders there fell in the high teens in Q2 2026. A deeper or longer Chinese property downturn would keep dragging on New Equipment sales, and eventually on the size of the maintenance portfolio those units would have added to Service.
• CEO Judy Marks, who has led Otis since its 2020 spin-off, announced her retirement in September 2026. The successor is expected to start in the first half of 2027, and Marks retires by July 31, 2027 at the latest. The search adds uncertainty about strategic continuity while margins are already under pressure.
• New Equipment is only about 9% of segment operating profit, but it seeds Otis's future maintenance base. Continued weak New Equipment sales and orders could slow the growth of the higher-margin Service portfolio the moat depends on.
• Otis's business rests on maintaining about 2.5 million elevators and escalators worldwide, so equipment failures, accidents, or safety recalls can lead to lawsuits, regulatory scrutiny, or reputational harm.
• Otis operates in more than 200 countries and territories, exposing it to currency swings, tariffs, and geopolitical disruption. In April 2026, management said that the Middle East conflict could cost $5-10 million of profit per quarter if it continued. In July 2026, management said that price increases broadly offset this cost.
• The elevator and escalator maintenance market is competitive, with large global rivals such as Schindler, KONE, and TK Elevator, plus many local independents. Aggressive pricing to win or keep service contracts could pressure margins further.

• October 7, 2026Otis said it will report Q3 2026 results and discuss its 2026 outlook on a conference call on October 28, 2026, at 8:30 a.m. ET.
• September 15, 2026Otis announced that CEO, Chair, and President Judy Marks will retire when her successor starts, expected in the first half of 2027, or on July 31, 2027 at the latest. If the successor starts earlier, she stays as an unpaid senior advisor until July 31, 2027. The board is running a search with Spencer Stuart and considers internal and external candidates. Reuters reported that the stock fell 1.4% in early trading.
• August 17, 2026Otis won an order for more than 250 elevators and escalators at Tianjin 117 Tower in China, a new supertall building. The order includes new equipment and modernization. Otis did not give the value of the order.