Carrier Global is a heavyweight in the world of intelligent climate and energy solutions, with the lion’s share of its 2024 sales (about 85%) coming from Heating, Ventilation & Air Conditioning (HVAC). The rest—around 15%—comes from its Refrigeration business, serving everything from big industries to cargo ships. Carrier’s HVAC arm keeps commercial buildings, homes, and factories at the right temperature, while its Refrigeration unit ensures safe transport and monitoring of perishable goods. The climate control industry is packed with competitors—think Johnson Controls, Daikin, Trane Technologies, and Lennox. What sets Carrier apart? Its sheer global scale (with just over half of sales from the Americas, nearly a third from Europe, the Middle East, and Africa, and the rest from Asia-Pacific), the Viessmann acquisition in 2024 that broadened its portfolio, and its growing suite of digital and aftermarket services. These perks put Carrier front and center in a market that cares deeply about energy efficiency, sustainability, and squeezing more out of existing equipment.\n\nOver the past year, Carrier’s stock is up 16.5%, handily beating the S&P 500’s 12.8% gain. The secret sauce? The smooth integration of Viessmann Climate Solutions (snapped up in early 2024), double-digit growth in its commercial HVAC backlog, price hikes that kept inflation at bay, and continued strength in its aftermarket business. Secular tailwinds for energy efficiency—and surging demand for cooling data centers—have helped too, keeping Carrier solidly ahead of rivals.\n\nCarrier reported full-year 2024 net sales of $22.5 billion, growing 19% from the year before. That includes 3% organic growth—business growth minus deals or divestments—and a chunky 16% lift from those very acquisitions and divestitures. In Q2 2025, organic sales rose 6%, thanks to ongoing strength in commercial HVAC and aftermarket services, which more than made up for a 4% hit from divestitures. The company’s growth story rides on several trends: its expanded Viessmann lineup (especially for homes and light commercial properties), rising demand for smart, energy-saving solutions (think Carrier Energy), tighter building codes pushing for efficiency and heat pumps, plus a growing need for cooling in data centers and heavy industry. Looking ahead, Carrier’s aiming for mid-single-digit organic growth in 2025, targeting $22.5–23.0 billion of sales and adjusted EPS of $2.95–3.05—a goal that points to mid-to-high-teens EPS growth.\n\nCarrier is a cash flow machine, with a free cash flow (FCF) yield of 5.78%. That easily tops the market average of 2.15% and blows past Carrier’s own five-year average of 0.93%. Adjusted operating margins are sturdy, holding close to 15%—and climbing to 19.1% in Q2 2025, up 1.3 percentage points from last year. The company is a bit more leveraged than average, with a debt-to-EBITDA ratio sitting around 2.0x (higher than the market average of about 1.29x), but it's backed by strong operational cash flow. Return on invested capital (ROIC) is 7.0%, however—that’s well below Carrier’s own five-year average of 16.6% and also lags the market’s 12.1%, pointing to room for improvement on how capital is deployed. The management team, led by CEO David Gitlin, has made big moves—a $10 billion portfolio overhaul, selling non-core pieces and committing $4 billion through 2030 to sustainable innovation—which deepens the company’s moat in energy-efficient tech.\n\nCarrier shares are trading at a forward P/E of 9.6x, a steep discount compared to the market’s 25.0x average. Its EV/sales multiple is 2.9x—below both its own five-year average of 2.5x and the market’s 4.4x. This discount is partly down to near-term margin pressure in the Refrigeration business and lingering impacts from recent reshuffling of business lines. That said, Carrier’s 2025 guidance sees margins improving by another full percentage point and EPS growing in the mid-teens, which could prompt investors to rethink how cheaply the stock is valued.\n\nAnalysts are generally upbeat, with 17 of them giving Carrier a consensus 'Moderate Buy.' Average twelve-month price targets are at $84.53, offering 21% upside from current levels. Firms like JPMorgan, Wolfe Research, and Mizuho have all upgraded Carrier to Overweight or Outperform, pointing to solid guidance and strong free cash flow. Short interest is at just 1.8% of shares—on a downward trend—suggesting few are betting against the stock. Technically, Carrier shares are trading 6.6% below their 50-day average after industrial stocks as a whole took a recent dip, and volatility is elevated (47% compared to the market’s 24.6%).\n\nMacroeconomic slowdown: A downturn in construction, manufacturing, or global trade could weigh on commercial and residential HVAC demand, pinching both sales and margins.Residential market weakness: US residential HVAC orders dropped a hefty 60% year-over-year in Q2 2025, showing just how sensitive Carrier is to the housing market and consumer spending.Raw material and logistics costs: Higher prices for steel, copper, and freight can squeeze margins—especially if Carrier can’t fully pass those extra costs on to customers.Competitive intensity: Rivals like Daikin, Johnson Controls, and Trane are pouring money into heat pumps and digital solutions, which could eat into Carrier’s market share and pricing power.Integration execution: Capturing the full benefits of the Viessmann deal and recent divestitures isn’t a given—it could take smooth execution and possibly more restructuring costs.Leverage level: Net debt to EBITDA near 2.0x is higher than the industry’s norm, which means less wiggle room if cash flows disappoint.Regulatory and tariff risk: Regulation around refrigerants (like the phase-down of HFCs) and tariffs—Mexico comes to mind—could crank up costs or disrupt supply chains.\n\nSecular demand tailwinds: Long-term rules around energy efficiency and climate compliance keep the HVAC replacement and aftermarket engines running.Aftermarket and digital services: Maintenance contracts and Carrier Energy's digital solutions mean recurring revenue, better visibility, and margin strength.Expanded portfolio: With the 2024 Viessmann acquisition, Carrier widened its reach in Europe and boosted its residential and light commercial offerings.Margin expansion: Another 100-basis-point margin boost in the 2025 guidance means more muscle behind EPS growth.Strong cash flow and buybacks: Carrier generated $2.3 billion in free cash flow in 2024—enough to drive a $3 billion share buyback plan, supporting both earnings and returns.Valuation discount: Trading at a forward P/E below 10, plus a subdued EV/sales multiple by both historical and peer standards, leaves room for a valuation bump.Data center and industrial growth: Rising demand for liquid cooling and precise temperature control—especially for data centers—opens up fresh growth avenues.\n\nEconomic sensitivity: Carrier’s business is tied closely to economic cycles—a broader slowdown could quickly unravel recent gains.Residential headwinds: Continued weakness in US housing and consumer confidence could pull organic growth below what’s forecast.Capital efficiency lag: Return on invested capital (ROIC) at about 7% trails past performance and peers, raising questions about future returns on new projects.Integration and execution risks: Delays or unexpected costs from selling or folding in acquired businesses could drag on margins and cash flow.Elevated leverage: Higher net debt to EBITDA cuts into financial flexibility, which matters more as interest rates and inflation climb.Regulatory uncertainty: Stricter or delayed refrigerant rules could push up both project costs and capital needs.Market volatility: A beta of 1.35 and high share price swings could scare off risk-shy investors and make the ride bumpier.\n\nQ2 2025 earnings: Results and webcast came out July 29, 2025, with fresh updates on organic growth and margins.Q3 2025 results: Earnings season hits again in late October 2025—a key checkpoint for the year’s guidance.Regulatory developments: The refrigerant phase-down (HFC rules) kicks in January 1, 2026, and could mean higher R&D and compliance costs.ZutaCore partnership: Carrier’s work with ZutaCore on advanced liquid cooling for data centers could help unlock new revenue streams.Further portfolio actions: More divestitures or small acquisitions could be on the cards, given the company’s $10 billion transformation streak.\n\nCarrier pairs its top spot in HVAC and refrigeration with a wide global reach and plenty of free cash flow. The stock stands out as undervalued—trading below 10× forward P/E and boasting a strong free cash flow yield—backed by guidance for better margins and a disciplined approach to spending and portfolio shaping. Still, investors should watch for short-term risks: macro headwinds, a soft US residential market, and the tough work of integrating recent deals. For long-haul investors looking to ride the wave of energy-efficient climate solutions, Carrier offers an appealing package—but the real test will be how it manages upcoming earnings, keeps up with new rules, and executes on its M&A strategy.

Carrier Keeps Its Cool As Profits Rise And Valuation Stays Low

Carrier Global, a leader in climate and energy solutions, reported strong 2024 financial performance with $22.5 billion in sales and 19% growth, driven by the Viessmann acquisition and digital services. The company’s stock outperformed the S&P 500, trading at a forward P/E of 9.6x, with strong free cash flow and guidance for mid-teens EPS growth. However, risks include macroeconomic slowdowns, residential market weakness, and integration challenges from recent deals.