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Otis Worldwide (OTIS) has announced a significant upgrade to its Gen3 Core elevator lineup, now featuring larger door openings, increased load capacity, and smart digital enhancements. These additions are designed to better serve low-rise buildings across the U.S. and Canada.

See our latest analysis for Otis Worldwide.

These Gen3 Core enhancements arrive as Otis Worldwide’s share price has traded sideways recently, holding near $88.85. The company has achieved a long-term total shareholder return of 47% over five years, indicating steady value creation. While the year’s total return is down 12%, momentum is showing subtle signs of recovery with a modest 2.9% gain in the last three months. This suggests investors may be responding to product innovations and renewed growth prospects.

If news of Otis’s upgraded technology has you curious about what else might be out there, it could be the perfect time to discover fast growing stocks with high insider ownership

With these product upgrades and a modest recent rebound in share price, is Otis currently undervalued by the market and offering a compelling entry point, or is future growth already reflected in today’s price?

Otis Worldwide’s most widely followed narrative sees the stock trading well below an updated fair value estimate, with share price lagging advanced growth projections. This fair value suggests analysts are seeing upside potential from today’s $88.85 closing price.

The accelerating momentum in modernization orders, up 22% in the quarter and supported by a record-high backlog, positions Otis to benefit from the global trend of aging building infrastructure. This trend is expected to drive a multi-year growth cycle for modernization and associated high-margin service revenue, with a positive impact on both revenue and earnings.

Read the complete narrative.

Ready to see the big drivers behind Otis’s surge in fair value? Earnings projections, margin gains, and a play for future market share are at the core of this story. Analysts are betting on growth levers you might not expect. Discover how ambitious assumptions are shaping this price target.

Result: Fair Value of $103.25 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, persistent weakness in China or a downturn in commercial real estate demand could quickly erode Otis’s growth outlook and undermine current analyst optimism.

Find out about the key risks to this Otis Worldwide narrative.

While fair value estimates signal Otis shares are undervalued, a look at the price-to-earnings ratio offers a different angle. Otis trades at 25.7 times earnings, slightly above the Machinery industry’s average of 24.8 but noticeably below the peer average of 33.9. The fair ratio our models suggest is 26.7, indicating that today’s pricing leaves little room for error if industry sentiment shifts. Could valuation risks outweigh the upside if growth fails to accelerate?

See what the numbers say about this price — find out in our valuation breakdown.

If you see the numbers differently or want to dig deeper into the data yourself, you can shape your own Otis Worldwide narrative in just a few minutes. Do it your way.

A great starting point for your Otis Worldwide research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Smart investing means staying ahead of the curve. Don’t miss your chance to uncover stocks redefining growth, value, and innovation using Simply Wall Street’s powerful tools.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include OTIS.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

• Ever wondered if Host Hotels & Resorts could be trading for less than it’s truly worth? You’re not alone, and today’s market gives us plenty of reasons to dig into the numbers.

• After climbing 9.6% over the past month and returning 33.7% in five years, the stock has shown there is both growth potential and fresh investor interest bubbling beneath the surface.

• New developments in the hospitality sector, such as increased travel demand and strategic acquisitions by competitors, have added some optimism and volatility to hotel REITs. Recent headlines point to shifting trends in business and leisure travel, which have also contributed to the latest movement in Host’s share price.

• On our six-point valuation check, Host Hotels & Resorts scores a 4 out of 6 for being undervalued, making it a compelling candidate for deeper analysis. We will break down how that score is calculated and, more importantly, explore an even smarter approach to understanding the company’s real worth by the end of the article.

Host Hotels & Resorts delivered 1.2% returns over the last year. See how this stacks up to the rest of the Hotel and Resort REITs industry.

The Discounted Cash Flow (DCF) model projects a company’s future cash flows and discounts them back to today’s value, providing an estimate of what the business is fundamentally worth. For Host Hotels & Resorts, this approach uses adjusted funds from operations to forecast future free cash flow and then applies a discount rate to translate those future dollars into today’s terms.

Currently, Host Hotels & Resorts reports Free Cash Flow of $1.387 billion. While analysts provide reliable estimates for up to five years, Simpy Wall St extrapolates further, showing projected annual Free Cash Flows between $1.12 billion and nearly $1.2 billion over the next decade. The methodology accounts for both modest growth and periods of stability as typical in the hotel and resort REITs sector.

Using this conservative projection framework, the resulting intrinsic value per share is $28.46. Compared to the current market price, this indicates the stock is trading at a 38.1% discount to its estimated value.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Host Hotels & Resorts is undervalued by 38.1%. Track this in your watchlist or portfolio, or discover 914 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Host Hotels & Resorts.

The Price-to-Earnings (PE) ratio is a widely used benchmark for valuing profitable companies like Host Hotels & Resorts. It measures how much investors are willing to pay for each dollar of earnings, making it a practical tool for comparing companies in the same industry or with similar growth profiles.

Generally, companies with higher expected earnings growth or lower risk profiles tend to have higher PE ratios, while those with slower growth or higher perceived risk tend to have lower multiples. A “normal” or “fair” PE is shaped not just by profits but also by factors such as stability, sector trends, and investor sentiment.

Host Hotels & Resorts currently trades at a PE ratio of 16.43x. This is just above the Hotel and Resort REITs industry average of 15.63x, but well below the peer average of 24.74x. This means the stock appears relatively modestly priced given both the industry context and what direct competitors trade at.

Rather than relying only on peer or industry averages, Simply Wall St has developed the proprietary “Fair Ratio” metric, which in this case stands at 29.92x. The Fair Ratio sets a tailored benchmark based on Host Hotels & Resorts’ earnings growth, its profit margins, specific risk profile, and market cap. It is designed to account for more than surface-level comparisons, giving a richer view of fair value for the stock.

Since Host Hotels & Resorts’ current PE ratio of 16.43x is well below its Fair Ratio of 29.92x, the stock appears undervalued by this measure and may have attractive upside potential for investors seeking value in the sector.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1437 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative connects your story or perspective about a company, such as your forecasts for fair value, revenue growth, and profit margins, to a financial forecast and ultimately a fair value estimate. This allows you to visualize how different assumptions may play out over time.

Narratives transform traditional stock research into a dynamic process where investors can align their view of a company’s future with real numbers. This makes it easy to see how changing your outlook or new events impact the valuation. Narratives are available within the Simply Wall St Community page and are used by millions of investors to compare Fair Value and current Price, supporting more confident investment decisions as information evolves.

Because Narratives update automatically when new data or news comes in, your analysis stays timely without extra effort. For example, one investor might use an optimistic Narrative for Host Hotels & Resorts, citing improved revenue growth rates and a bullish price target of $22.00, while another could focus on market risks and assign a conservative $16.00 target. Narratives let you explore both stories, see the numbers behind them, and decide which aligns best with your own view.

Do you think there’s more to the story for Host Hotels & Resorts? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include HST.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com