newsgathers

Carrier Global Corp. (CARR) stands as a compelling investment opportunity, demonstrating resilience amidst a subdued North American residential market. The company's strategic focus on high-growth sectors, particularly data centers and the aftermarket, is effectively counterbalancing weaknesses in other areas. With a projected 8.1% EPS growth to $2.80 by 2026, fueled by expanding margins and share repurchases, CARR presents an attractive valuation relative to its HVAC industry counterparts, especially when accounting for its growth trajectory.

The current market sentiment, heavily influenced by the downturn in residential construction, appears to have already factored in these challenges. However, the company's diversified portfolio, coupled with its strong presence in the data center cooling segment, provides a significant hedge against such cyclical fluctuations. The ever-increasing demand for data storage and processing power ensures a steady revenue stream for Carrier's specialized solutions. Furthermore, the inherent stability of the aftermarket business, driven by routine maintenance and replacement cycles for installed systems, offers a reliable foundation for consistent performance.

Carrier's financial outlook for the coming years is underpinned by a clear strategy. Management is committed to enhancing profitability through operational efficiencies and cost control measures, leading to margin expansion. Alongside this, a disciplined approach to capital allocation, including share buyback programs, is set to boost earnings per share and return value to shareholders. These internal levers of growth are expected to mitigate external pressures and contribute to the company's overall financial health.

From a valuation perspective, Carrier's stock appears undervalued. Trading at a 2026 price-to-earnings (P/E) ratio of 22.3 and a PEG ratio of 1.5, it is positioned favorably against its peers in the heating, ventilation, and air conditioning (HVAC) sector. This suggests that the market may not be fully appreciating Carrier's growth potential and its ability to adapt to changing market conditions. Any positive shift in the U.S. housing market could serve as a significant catalyst, potentially leading to an upward revision of Carrier's guidance and a re-rating of its stock before such improvements are widely anticipated.

In summary, Carrier Global Corp. is demonstrating a strategic agility that positions it for long-term success. By leveraging the robust demand from data centers and its resilient aftermarket business, while actively pursuing margin expansion and shareholder returns, the company is well-equipped to navigate current market challenges. The prevailing pessimism regarding the residential sector seems to be adequately reflected in the stock's current price, suggesting that any improvements in this area could provide substantial upside, making Carrier a noteworthy consideration for investors.