CARR: AI-Driven Bearish Outlook and Options Strategy

Carrier Global Corporation is a global provider of intelligent climate and energy solutions. The company operates through two segments: HVAC and Refrigeration. The HVAC segment offers heating, cooling, and ventilation products, controls, and services under brands like 'Carrier', 'Viessmann', 'Toshiba', and 'Automated Logic', serving residential, commercial, and industrial markets including education, healthcare, data centers, and retail. The Refrigeration segment, operating under brands including 'Carrier Transicold' and 'Sensitech', provides transport refrigeration solutions, including equipment and monitoring services for trucks, trailers, and shipping containers, targeting transportation companies. Carrier differentiates itself by providing digitally-enabled lifecycle solutions, focusing on energy-efficient and sustainable technologies, and offering a comprehensive suite of aftermarket products and services, including digital monitoring and upgrades.

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CARR's technical outlook is decidedly bearish. The stock is currently trading at $57.56, significantly below its 50-day SMA of $60.42 and 200-day SMA, indicating a strong downtrend. The recent price action confirms this bearish sentiment, with a consistent series of lower highs and lower lows. Momentum indicators reinforce this view; the MACD is negative and diverging further below its signal line, and the RSI at 45.76, while not oversold, is trending downward. The ADX is elevated at 31.81 suggesting a strong established trend. The Stochastics oscillator shows a value of 45.83, which is not an oversold condition and suggests further room to decline. The Bollinger Bands show the price near the lower band, suggesting downside pressure. The ROC is also negative, confirming the downward momentum. With all these factors combined, CARR appears poised for further declines over the next 1-3 months, with limited evidence of any potential reversal in sight. The recent small price increase is not enough to offset the overwhelming bearish signals.

Carrier Global Corporation's MD&A presents a mixed financial performance. For the three months ended September 30, 2025, 'Net sales' decreased by 7% to $5.6 billion compared to $5.984 billion in the same period of 2024, with an organic sales decrease of 4% primarily due to reduced end-market demand in the Americas and Europe. 'Gross margin' also decreased by 14% to $1.4 billion, with gross margin as a percentage of net sales decreasing by 200 basis points to 26.0%. For the nine months ended September 30, 2025, 'Net sales' were $16.9 billion, a 2% decrease year-over-year. However, gross margin increased by 1% to $4.7 billion, with gross margin as a percentage of net sales increasing by 90 basis points to 27.6%. Net cash flows provided by continuing operating activities decreased to $1.076 billion from $1.208 billion, driven by an increase in working capital balances. The company is actively managing its portfolio, having completed several divestitures and the acquisition of the VCS Business. The company expects to 'fully mitigate' the expected 2025 impact from tariffs through supply chain and productivity actions. In October 2025, the Board of Directors approved a $5 billion increase to the share repurchase program, signaling confidence. However, the decrease in net sales and gross margin for the recent quarter, coupled with the decrease in cash flow from operating activities, suggest potential headwinds in the short term.

Carrier's Q2 2025 earnings call struck a moderately bullish tone, emphasizing strong growth and profitability despite some headwinds. CEO David Gitlin highlighted 'another strong quarter' with 6% organic growth driven by 'exceptional 45% growth in commercial HVAC in the Americas' and 13% aftermarket growth. The company reaffirmed its full-year guidance, expecting mid-single-digit organic sales growth and 'close to 20% adjusted EPS growth at the midpoint'. CFO Patrick Goris noted that Q2 adjusted EPS of $0.92 was 'better than expected due to slightly higher sales and stronger productivity'. While residential sales were 'below our expectations due to lower volume', commercial sales in the Americas compensated. Management is addressing challenges in Europe, expecting a return to growth in the second half. Overall, Carrier remains optimistic, focusing on productivity, cost synergies, and growth initiatives, particularly in data centers and aftermarket services.

CARR's financial performance presents a mixed picture. Revenue has generally increased, from $5.102B in Q4 2023 to $5.579B in Q3 2025, demonstrating top-line growth. The gross profit ratio, however, has fluctuated, starting at 0.281 in Q4 2023, dipping to 0.249 in Q2 2024, and settling at 0.260 in the latest quarter, indicating some volatility in profitability. Operating cash flow has also varied significantly, with a latest figure of $324M in Q3 2025, compared to $1.062B in Q4 2023. Total debt has decreased considerably from $14.626B in Q4 2023 to $12.34B in Q3 2025, a positive sign for the company's solvency. While revenue is growing and debt is decreasing, the inconsistent profitability and operating cash flow suggest a need for closer monitoring of CARR's financial management.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting efficient cost management. Return on Equity (ROE) has shown positive movement, signaling enhanced profitability and efficient use of shareholder equity. The Price-to-Earnings (P/E) ratio, while elevated, might be justifiable given the growth trajectory and positive ROE trend. The Debt-to-Equity ratio shows a slight increase, which warrants monitoring, but is counterbalanced by a healthy Current Ratio, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable picture with growth and profitability, though the leverage should be watched closely. The combination of growth and profitability suggests potential for continued positive performance over the next 12 months.