Carrier Global Corporation
Analysis
Across four calls Carrier went from cutting guidance on a residential slump it misread to raising it, as the slump ended and data centers became the growth engine. What is unproven is whether that growth pays: the fastest-growing half of the business earns less per dollar sold.How much of the $8 billion backlog ships over the next 12 months?
- The residential collapse behind the 2025 miss is over.
CSA Resi sales fell for three straight quarters and forced a guidance cut, then rose 9% in Q2 FY2026 with field inventories down about 25%. Management now guides it up high single digits, so the drag is off its most profitable business.How much of the resi rebound is price, not units sold?
- Data centers are now the reason Carrier grows.
Data center sales doubled to about $1 billion in 2025 and may roughly double again, with backlog now above $8 billion. Management is building a new US chiller plant because it cannot make enough, so this business sets the growth rate.
- Sales are growing faster than profit.
Q2 organic sales rose 3% yet the operating margin still fell, as the profitable businesses, residential and light commercial, shrank. The raise added $1 billion of sales for ten cents of earnings and Europe's margins disappointed.Why did Europe's margins miss despite heat pump growth?
- US residential keeps recovering from a depressed market. A home unit carries far more profit than a data center chiller, so each one sold lifts earnings faster than sales.
- The data center backlog converts into shipped revenue. This year's data center sales are already booked, so the risk is delivery, not demand, and service follows every unit.
- Last year's cost cuts and price rises stay in. $100 million of savings carries over, so the same sales earn more and any rebound in home demand falls to profit.
- The residential rebound is mostly a comparison effect. Most of the gain is last year's inventory clearance not repeating, so if real demand stays flat the growth disappears.
- The new chiller plant costs money before it earns any. Plant spending rises to $600 million and start-up costs hit earnings now, though it runs only from early next year.
- Commercial work earns less per dollar than home units. A bigger order book can still mean a lower profit rate, and Europe is still short of the margin target management set.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Sale | ≥$250K | Aug 21 | Oct 8 |
Donald Trump Republican · Executive | Purchase | ≥$500K | Jul 20 | Sep 22 |
Donald Trump Republican · Executive | Sale | ≥$1K | Mar 26 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Mar 23 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$1K | Mar 17 | May 13 |
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How Carrier Global turned $21.7B of revenue into $2.2B of operating income.
| Revenue | ||
|---|---|---|
| Product | $19.2B | ▼ 4.09% YoY |
| Service | $2.6B | ▲ 3.12% YoY |
| Total revenue | $21.7B | |
| Gross profit | $5.6B | 25.9% |
| Operating income | $2.2B | 10.0% |