Is Otis Worldwide Corporation (OTIS) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $78.77, Otis Worldwide Corporation (OTIS) sits inside a range too wide to call either way: our valuation lenses put the business somewhere between $31.04 and $104.09 per share. They disagree too widely for us to state a single fair value. We publish the range rather than a midpoint because a number that precise would claim more than the methods can support. This is an educational model, not a price target or a recommendation.
The valuation discounts Otis Worldwide Corporation's projected free cash flows at a weighted-average cost of capital (WACC) of 8.3%, with a long-run terminal growth rate of 2.5%. About 77% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — the market is implying roughly 4.7% annual revenue growth for OTIS. Our base case instead compounds to about 4.4% a year over the same forecast, so the market's implied growth is broadly in line with our base case. The reverse-DCF is a quick sanity check: it reframes 'is this stock cheap?' as 'do I believe the growth the price requires?' rather than arguing over a single point estimate of fair value.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, OTIS's modeled DCF value ranges from about $39.64 to $125.47 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what Otis Worldwide Corporation would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of OTIS's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind OTIS's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $14,431,000,000 | Otis FY2025 10-K (accession 0001781335-26-000011, filed 2026-02-05): us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, FY2025 = $14,431M, +1.2% on FY2024's $14,261M with FLAT organic growth. The mix is the whole story: Service $9,442M (+6.2%, 65% of sales) vs New Equipment $4,989M (-7.0%, 35%), per the Q4 2025 release segment table. UNCHANGED as the base; the new quarters belong in the forecast. CROSS-CHECK: H1 2026 net sales $7,425M, +6.9% on H1 2025's $6,945M (organic +4%, the rest currency); Service +11% (organic +7%), New Equipment flat (organic -3%, China down high-teens in Q2). |
| Base EBIT margin | 16.5% | Otis Q4 2025 earnings release, 8-K Ex-99 (accession 0001781335-26-000004, filed 2026-01-28): DERIVED, and the first judgement call. GAAP operating profit was $2,133M (14.8%); Otis's adjusted operating profit was $2,434M (16.9%). I use neither: $2,434M LESS the $54M of 'other restructuring' = $2,380M / $14,431M = 16.49%, rounded to 16.5%. Why: Otis books 'other restructuring' every single year ($40M FY2024, $54M FY2025, $18M H1 2026), so it is a running cost and stays IN. What I strip out is genuinely non-recurring: UpLift restructuring $76M + UpLift transformation $69M (the program has ended — zero UpLift charges in H1 2026), $70M of separation-related payments owed to RTX under the 2020 spin Tax Matters Agreement (a tax indemnity, not an operating cost), $21M litigation and $10M impairment. This base margin is display-only in the engine (the forecast margins drive value) but it sets the cyclical-flag peak. CROSS-CHECK: H1 2026 on the same basis is $1,137M adjusted - $18M other restructuring = $1,119M / $7,425M = 15.1% — 140bp BELOW the base, which is why Year 1 steps down. |
| Forecast revenue growth | 5% → 4% → 4% → 4% → 4% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | US 10Y Treasury constant maturity (FRED DGS10): 5.24% on 2026-10-01, the latest published observation. Program-wide input shared by every researched model in this run. |
| Beta | 0.86 | Yahoo Finance 5Y-monthly beta via yfinance: Published 5Y-monthly beta 0.859, used as-is. Considered and rejected a normalization: the 2020 spin gives Otis a little over six years of its own return history, so the 5Y window is clean of the UTC period, and 0.86 is plausible for a business whose earnings are two-thirds recurring maintenance contracts. Each 0.1 of beta moves the value about $5.30/share; the reverse-DCF in the explainer reports the beta that would justify today's price. |
| Terminal growth | 2.5% | Assumption — house default: House default 2.5% (roughly long-run nominal GDP), kept for comparability. Defensible for Otis specifically: the installed base of ~2.5 million maintained units only grows, elevators are legally required to be maintained in most markets, and aging buildings feed modernization. Must remain < WACC (~8.3%). 2.0% would take ~$5.60/share off; 3.0% would add ~$6.70. |
| Diluted shares | 384M | Otis Q2 2026 earnings release, 8-K Ex-99 (accession 0001781335-26-000110) / Q2 2026 10-Q: Q2 2026 weighted-average diluted shares 383.5M (H1 2026 386.4M; FY2025 394.9M). The count FALLS ~3% a year: Otis bought back ~$800M of stock in H1 2026 and ~$800M in FY2025. Shares outstanding at 2026-07-15 were already 380.7M. Using the Q2 diluted figure rather than the cover count is the house treatment for SBC dilution; it is slightly conservative given the continuing buyback. |
| Market price | $78.77 | Delayed quote · as of 2026-11-10 05:22 UTC |
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