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Analyzing Carrier Global’s Newly Added Risk Factors

Florida-based Carrier Global (CARR) provides heating, air-conditioning, refrigeration, and fire and security solutions. The company recently sold its fire and security brand Chubb to APi Group (APG). The transaction valued the business at $3.1 billion and Carrier booked $2.6 billion in net proceeds.

Carrier plans to use a portion of the money from the Chubb sale to fund its share repurchase program. The company has unveiled a $1.6 billion share repurchase program, including a $500 million accelerated repurchase.

Carrier acquired Denmark-based residential alarm provider Cavius. It says the Cavius acquisition will bolster its residential fire and safety solutions in Europe.

Carrier’s earnings report shows revenue jumped 7% year-over-year to $5.3 billion in Q3 2021 but fell slightly short of the consensus estimate of $5.39 billion. The company posted adjusted EPS of $0.71, beating the consensus estimate of $0.66.

The company plans to distribute a quarterly dividend of $0.15 per share on February 10. Carrier stock currently offers a dividend yield of 0.93%.

With this in mind, we used TipRanks to take a look at the newly added risk factors for Carrier.

Risk Factors

According to the new TipRanks Risk Factors tool, Carrier’s main risk category is Finance and Corporate, representing 35% of the total 40 risks identified for the stock. Production and Legal & Regulatory are the next two major risk categories at 20% and 18% of the total risks, respectively. Carrier has recently updated its profile with two new risk factors.

The company informs investors that its manufacturing operations use a wide range of materials and components that it sources from numerous suppliers around the world. For some items, Carrier says it relies on a single supplier. The company cautions that if the suppliers are unable to deliver the items it needs or the costs of those items increase, its products’ sales and operating results could be adversely affected.

Furthermore, Carrier cautions that it expects to continue to be impacted by the global semiconductor shortage. The company also mentions that extreme weather events arising from climate change could exacerbate shortages of manufacturing materials and cost inflation. As a result, Carrier could experience difficulties manufacturing certain products.

The company tells investors that President Joe Biden’s COVID-19 vaccine mandate may result in employee attrition, including the loss of critically skilled labor. It explains that the labor problems resulting from the mandate could be experienced by its suppliers as well. As a result, Carrier warns that it may experience challenges in obtaining manufacturing materials and equipment, which could adversely affect its business and financial condition.

The Finance and Corporate risk factor’s sector average is 33%, below Carrier’s 35%. Carrier’s stock has gained about 42% over the past year.

Analysts’ Take

Barclays analyst Julian Mitchell recently reiterated a Buy rating on Carrier Global stock and raised the price target to $65 from $62. Mitchell’s new price target suggests 20.77% upside potential.

Consensus among analysts is a Moderate Buy based on 3 Buys and 7 Holds. The average Carrier Global price target of $59.30 implies 10.18% upside potential to current levels.

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