By Jacob Sonenshine

Carrier Global stock has floundered since we recommended it, but there's plenty of reason to believe in the business -- and the stock.

Shares are about flat since we published our pick in March, while the S&P 500 has powered 22% higher. We thought, correctly, that the data center boom would lift sales for commercial heating, ventilation, and air conditioning, or HVAC. We also thought the market for residential HVACs, which usually comprise a double-digit percentage of total sales, couldn't get much worse. That part was wrong.

We think it's too soon to give up on the stock. The company may very well have understated the potential for residential recovery this year and it has strong long-term earnings potential.

Carrier's $4.84 billion of sales in the fourth quarter of 2025 missed analyst estimates of $4.97 billion. Its adjusted earnings of 34 cents per share narrowly missed forecasts of 36 cents. Total organic revenue declined 9%, driven by yet another drop in residential sales, which have suffered from weak housing demand in the past few years.

Management's call for $22 billion of sales this year missed analyst projections of $22.48 billion just before the earnings release, helping drive EPS guidance of $2.80 below the previous analyst forecasts of $2.87.

The stock was up 4% to about $66 from the trading day before its Feb. 5 earnings report to now. That is well above the low-$50 area, where it has consistently found support from buyers since late 2023. The fact that the stock can trade buoyantly through mild disappointments shows that the worst may be priced in.

Additionally, some wisps of good news did indeed crop up in the earnings and guidance.

The residential business may not turn out as terribly as it looks today. With sentiment for new home sales having improved in the past few months, and mortgage rates down versus last year partly in response to the Federal Reserve's rate cuts, residential demand for HVACs could easily improve. Plus, Carrier endured an industry "destocking" last year, meaning retailers were refraining from additional HVAC purchases, which helps set up a favorable growth comparison for this year. Those dynamics make this year's sales guidance easily beatable.

"Carrier has conservatively assumed no 2026 recovery in North America resi (30% of revenue) even though there should be a second half 2026 lift when destocking comps ease," writes RBC analyst Dean Dray, who has a $74 price target and an Outperform rating on the stock.

Meanwhile, the data center business is humming along. As Big Tech services companies build out those assets to support AI ambitions, they need to buy more equipment, including Carrier's products. The company's data center sales drove growth in its commercial segment in the quarter, bringing its full year 2025 data center revenue to about $1 billion. Guidance called for 50% growth this year.

Overall, the company has positioned itself to grow earnings over the long term. Management's guidance calls for the operating profit margin to re-expand to just over 15% this year, near where it was in 2024 before the turbulent 2025. The company is still repurchasing shares with its annual free cash flow of more than $2 billion. Over the long term, the combination of sales and stock buybacks can spur the 15% annual EPS growth analysts currently project for the three years after 2026, according to FactSet.

That growth would take the stock higher. Shares trade at about 23 times expected EPS for the coming 12 months, near the middle of its five-year range. This multiple peaked at almost 27 times in 2024. It's also cheaper than peers Johnson Controls, Eaton, and Trane Technologies, the latter of which trades at 31 times.

Be patient with this name. Earnings this year could carry the stock higher.

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February 11, 2026 09:27 ET (14:27 GMT)

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