Carrier Global
Manufactures and sells HVAC and refrigeration/transport-cold-chain equipment (residential, light-commercial, commercial, and data-center cooling) plus a fast-growing recurring aftermarket (parts, service, controls, digital). Roughly asset-light assembly with global distribution; revenue mixes new-equipment cyclicality with higher-margin replacement + aftermarket annuity.
Earnings, margins, COGS & capex
FY2025 net sales $21.75B (-3% reported, -1% organic) as divestitures (Fire & Security, Access Solutions, Commercial Refrigeration) shrank the reported top line while Carrier completed its transformation into a pure-play climate company. Adjusted operating margin 15.1%, adjusted EPS $2.59 (continuing ops); GAAP EPS $1.69. Strong FCF ($2.121B) funded ~$3.7B of capital returns (~$0.8B dividends + ~$2.9B buybacks). Q1 2026 beat on adjusted EPS ($0.57 vs ~$0.51 est) with revenue $5.341B (+2.4%); the story is order momentum — commercial HVAC orders +35%, data-center orders +500% YoY — reaffirming ~$22B / ~$2.80 adjusted EPS FY2026 guidance.
Income statement — where each revenue dollar goes
% of revenueOf every $1 of revenue, ~70¢ is cost of goods and ~15¢ operating expense, leaving ~15¢ of operating profit.
Revenue trend
Margins
troughed FY2025; management targets 16.5-17%+ medium-term on ~$100M overhead savings + synergies (year-by-year path est.)
up vs prior year ex one-offs
guided ~$2.80 FY2026 (~8% growth)
GAAP net income fell sharply YoY (2024 lapped large divestiture gains)
~$2B FCF guided FY2026
COGS structure
COGS ~70% of sales (gross margin ~30%, est.). Key input costs: steel, copper, aluminum, electronic components/compressors, and refrigerants. Exposure to raw-material and tariff inflation; being offset by pricing, productivity, and a ~3,000-person (H2 2025) restructuring worth ~$100M of overhead savings.
Capex
Low: ~$0.39B FY2025 (~1.8% of sales). Growth is funded more by M&A (Viessmann) and R&D on heat pumps / data-center liquid cooling than by heavy plant capex.
Latest earnings
Beat on adjusted EPS ($0.57 vs ~$0.51 est) and revenue ($5.341B vs ~$5.0B est, ~$340M above); GAAP EPS $0.28. Cash flow softer YoY.
Reaffirmed FY2026: sales ~$22B, adjusted EPS ~$2.80, adjusted operating profit ~$3.4B, FCF ~$2B, ~$1.5B buybacks, flat-to-LSD organic growth
- Commercial HVAC orders
- +35% YoY
- Data-center orders
- +500% YoY
- DC backlog
- fully covers the ~$1.5B FY2026 data-center sales target
- Aftermarket growth FY2025
- +20% (5th straight double-digit year)
Growth drivers
- Data-center cooling — precision chillers + liquid cooling to hyperscalers; orders +500% YoY in Q1 2026, DC revenue targeted $1B (2025) -> $1.5B (2026); NVIDIA reference-design collaboration (incl. Vera Rubin thermal), Carrier Ventures stake in ZutaCore liquid cooling
- Commercial HVAC: 6th consecutive year of double-digit growth targeted; orders +35% in Q1 2026
- Aftermarket: +20% in FY2025, 5th consecutive double-digit year — recurring, higher-margin parts/service/digital annuity
- Refrigerant transition (A2L / low-GWP) driving a regulatory replacement cycle in residential + commercial
- Energy transition / heat pumps via Viessmann (premium European brand) — structurally long-term, near-term subsidy-dependent
- Margin self-help: restructuring, productivity, Viessmann synergies toward a 16.5-17%+ operating-margin target
Reported financials — SEC EDGAR
Audited GAAP figures pulled from SEC filings · latest filing 2026-02-05. The audited primary-source spine — not financial advice.
Revenue — annual (GAAP)
Margins & balance sheet — FY’25
Bull & bear
A newly simplified pure-play climate compounder with a genuine AI-data-center-cooling growth vector and a compounding aftermarket, plus a clear margin-expansion path and heavy capital returns.
- Transformation done: exited Fire & Security / Access / Commercial Refrigeration, added Viessmann — a focused, higher-growth climate leader with less complexity
- Data-center cooling is a real, fast-scaling business ($1B -> $1.5B target) with orders up 5x and an NVIDIA reference-design seat — optionality most HVAC peers lack at this scale
- Aftermarket +20% (5th straight double-digit year) shifts mix toward recurring, higher-margin annuity revenue
- Adjusted operating margin troughed at 15.1% with management targeting 16.5-17%+ medium-term on synergies + ~$100M restructuring savings
- ~$2B FCF and ~$3.7B returned to holders in 2025 (dividend + buyback); ~$1.5B more buybacks guided 2026
- A2L refrigerant transition underpins a multi-year replacement cycle in the core book
Paying a premium multiple (~47x trailing GAAP / ~25x forward) for a company whose core is only flat-to-low-single-digit organic, whose European heat-pump bet is underperforming, and whose headline growth leans on a possibly lumpy data-center order spike.
- Reported revenue fell 3% in 2025 and 2026 guides to only ~flat-to-LSD organic — the growth narrative rests heavily on the data-center pocket, which can be cyclical/pull-forward and hyperscaler-concentrated
- Viessmann / Climate Solutions Europe margin ~8.8% (est.) and heat-pump demand hit by subsidy cuts — the marquee acquisition is underdelivering near-term
- Net debt ~$10.7B raises rate/leverage sensitivity; buybacks partly debt/divestiture-funded rather than pure organic FCF
- Valuation: ~47x trailing GAAP PE and ~25x forward for mid-single-digit EPS growth is priced for near-flawless execution
- Residential / light-commercial HVAC weak and exposed to housing, rates, and tariff-driven input inflation
- Competitive intensity in data-center thermal from Vertiv, AAON, Johnson Controls and Daikin could compress the very margins the bull case assumes
What it is worth
Blended: forward P/E on adjusted EPS + EV/EBITDA cross-check vs HVAC peers (Trane, Lennox, Daikin), triangulated to the secular data-center + aftermarket growth premium.
~$52-58
data-center orders digest/prove lumpy, Europe stays weak, organic growth stalls and the multiple de-rates to ~18-20x forward on slower EPS.
~$72-78
guidance delivered (~$2.80 FY2026 EPS, mid-single-digit EPS growth), ~25-27x forward — near current price / consensus ~$76 target.
~$85-95
data-center revenue scales past $1.5B and compounds, aftermarket stays double-digit, margins reach 17%+, Europe recovers — supports ~28-30x a rising EPS base (~$3.10-3.30 FY2027E).
At ~$70, CARR trades ~25x forward adjusted EPS (~$2.80 FY2026) and ~47x trailing GAAP EPS; EV ~$68-69B implies ~15-16x FY2026 EBITDA (~$3.4B adj OP + D&A). That is a premium to legacy industrials but roughly in line with pure-play HVAC peer Trane, reflecting data-center-cooling optionality and margin-expansion runway. The premium is justified only if data-center/commercial growth and margin targets (17%+) materialize; flat core organic growth is the check on it.
SWOT
Strengths
- Iconic brand (Carrier invented modern air conditioning) plus premium Viessmann in European heat pumps
- Large installed base feeding a fast-growing, higher-margin recurring aftermarket (+20% FY2025)
- Clear #1/#2 positions across HVAC verticals; scale + distribution depth
- Structural exposure to two secular tailwinds: AI data-center cooling and refrigerant/efficiency transition
- Strong FCF conversion (~$2.1B FY2025) funding dividends + buybacks (~$3.7B returned in 2025)
Weaknesses
- European segment (Climate Solutions Europe) margin only ~8.8% FY2025 (est.) — dilutive vs ~20%+ Americas; Viessmann heat-pump demand soft on subsidy cuts
- Net debt ~$10.7B post-Viessmann elevates leverage vs pre-deal balance sheet
- Flat-to-low-single-digit organic growth outside the data-center pocket; residential/light-commercial soft and cyclical
- GAAP earnings quality noisy through the multi-year portfolio reshaping (divestiture gains/charges)
Opportunities
- AI/data-center liquid cooling as a durable, high-growth adjacency (NVIDIA collaboration, ZutaCore)
- Aftermarket/digital (BluEdge, controls) expansion — annuity revenue, margin accretive
- Viessmann/Toshiba-Carrier heat-pump upside if European subsidies and renovation demand recover
- A2L refrigerant regulation forcing an equipment replacement supercycle
- Further margin expansion (restructuring + synergies) toward 17%+
Threats
- Data-center order surge could prove lumpy or pull-forward; hyperscaler capex concentration risk
- Direct competition from Trane, Daikin, Johnson Controls, Lennox; Vertiv/AAON in data-center thermal
- Housing/rate cyclicality and tariffs pressuring residential volumes and input costs
- European heat-pump policy volatility (subsidy withdrawal already bit demand)
- Rich valuation leaves little room for execution slips
Moats, dependencies & bottlenecks
Moats
Carrier and Viessmann are premium, century-old brands; the huge installed base is the funnel for replacement + aftermarket
Service contracts, parts, and controls create sticky recurring revenue growing ~20%/yr
Global manufacturing/distribution and dealer networks are hard to replicate; commoditized in low-end residential
Refrigerant (A2L) and efficiency rules favor incumbents with compliant portfolios; policy can also cut both ways (EU subsidies)
NVIDIA reference-design collaboration and liquid-cooling IP (ZutaCore) are early but differentiating; contested by Vertiv/AAON
Dependencies
The 500% order surge and $1.5B DC target hinge on continued hyperscaler build-out; concentrated, cyclical
Residential HVAC tied to housing activity, rates, and weather; replacement demand is the ballast
Regulatory/Demand Demand already dented by subsidy withdrawal; recovery depends on EU/German policy and renovation cycles
Copper, steel, aluminum, refrigerants (Chemours, Honeywell), compressors (Emerson/Copeland); tariff and price exposure
Transition drives replacement demand but requires flawless product re-engineering/certification
Advantages
- First-mover scale in data-center cooling among diversified HVAC OEMs
- Recurring aftermarket annuity growing double-digits, mix-accretive
- High FCF conversion + disciplined capital returns
- Premium brand pricing power (Carrier, Viessmann, Toshiba-Carrier)
- Pure-play focus post-divestitures reduces complexity and conglomerate discount
Weaknesses
- Core organic growth only flat-to-low-single-digit ex data center
- Lowest-margin European segment weighing on group margin
- Elevated leverage from the Viessmann deal
- Premium valuation with limited margin for error
- Cyclical residential and tariff/input-cost exposure
Bottlenecks
- European (Viessmann) margin drag until heat-pump demand and mix recover
- Data-center capacity / supply chain to convert the order backlog into revenue on schedule
- Balance-sheet deleveraging pace (~$10.7B net debt) constraining flexibility
- Skilled-labor and installer availability limiting downstream install throughput
- Input-cost and tariff inflation on core equipment margins
Top signals & trends
Top signals
Strongest near-term growth signal; watch for order digestion/lumpiness
Broad-based commercial strength, not just data center
Improving revenue quality / recurring mix
Underlying growth modest outside the DC pocket; Q4 2025 organic -9%
Viessmann underdelivering near-term
Shareholder-friendly capital allocation
Priced for execution; downside on any miss
Trends
High positive · Rising rack densities (NVIDIA Vera Rubin era) drive precision-cooling and liquid-cooling demand
Regulatory-forced equipment replacement supercycle
Positive long-term / mixed near-term · Structural demand offset near-term by European subsidy volatility
Shifts mix to recurring, higher-margin revenue
Pressures COGS; partly offset by pricing and productivity
Residential demand sensitive to rates; replacement demand cushions
Ecosystem & competitor graph
Suppliers feed the company; customers pull from it. Line thickness shows the strength of each tie (supply-chain dependency, customer earnings contribution). Hover to isolate a tie.
Compressors and climate components
Refrigerants (Opteon low-GWP)
Refrigerants (Solstice) and building-tech components; also a competitor and buyer of Carrier's Access Solutions
Private liquid-cooling partner (Carrier Ventures stake) for AI data centers
Copper/steel/aluminum + electronics suppliers Commodity + semiconductor inputs driving COGS
Hyperscaler data-center cooling demand
Hyperscaler data-center cooling demand
Hyperscaler data-center cooling demand
Hyperscaler data-center cooling demand
Channel to residential/commercial installers
Residential new-construction HVAC demand
Closest pure-play HVAC comp; commercial-heavy, premium multiple, strong data-center exposure
World's largest HVAC maker; global scale, strong in heat pumps and VRF
Building controls + HVAC + data-center cooling; overlapping commercial franchise
North American residential + light-commercial HVAC; high-margin, tight focus
Data-center thermal + power specialist; direct rival in the DC-cooling growth pocket
Semi-custom commercial + fast-growing data-center cooling; nimble share-gainer
Largest HVAC/R distributor; partner more than competitor but controls channel power
Copeland compressors + cold-chain/climate tech; supplier and competitor