Heating, ventilation, air conditioning, and refrigeration company Carrier Global (NYSE: CARR) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 3% year on year to $6.11 billion. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $23 billion at the midpoint. Its non-GAAP profit of $0.92 per share was 2% above analysts’ consensus estimates.

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"We delivered another quarter of strong financial performance," said Carrier Chairman & CEO David Gitlin.

Company Overview

Founded by the inventor of air conditioning, Carrier Global (NYSE: CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, Carrier Global’s 5.5% annualized revenue growth over the last five years was tepid. This fell short of our benchmark for the industrials sector and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Carrier Global’s annualized revenue growth of 5.3% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Carrier Global’s organic revenue averaged 3% year-on-year growth. Because this number is lower than its normal revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, Carrier Global grew its revenue by 3% year on year, and its $6.11 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 5.5% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and indicates its newer products and services will not lead to better top-line performance yet.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Carrier Global has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 15.3%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, Carrier Global’s operating margin decreased by 5 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Carrier Global generated an operating margin profit margin of 14.8%, up 2.6 percentage points year on year. The increase was a welcome development and shows its expenses recently grew slower than its revenue, leading to higher efficiency.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Carrier Global’s EPS grew at an astounding 18.2% compounded annual growth rate over the last five years, higher than its 5.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Carrier Global, its two-year annual EPS growth of 9.3% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q2, Carrier Global reported EPS at $0.92, up from $0.87 in the same quarter last year. This print beat analysts’ estimates by 2%. Over the next 12 months, Wall Street expects Carrier Global’s full-year EPS of $2.88 to grow 14%.

Key Takeaways from Carrier Global’s Q2 Results

Revenue was in line, but Carrier's EBITDA missed. Looking ahead, its full-year EPS guidance was in line with Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 2.6% to $78.20 immediately following the results.

Carrier Global may have had a tough quarter, but does that actually create an opportunity to invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.