CARRIER GLOBAL Corp (CARR) stock intrinsic value fair value estimate & owner earnings analysis

Carrier is a heating, ventilation and air-conditioning company. It reports four segments: Climate Solutions Americas ($10.5 billion of 2025 sales), Climate Solutions Europe (which includes the Viessmann residential heating and heat-pump business acquired in 2024 for about $10.8 billion), Climate Solutions Asia Pacific, Middle East & Africa, and Climate Solutions Transportation (refrigerated transport). Total 2025 sales were $21.7 billion, down 3% with organic sales down 1% on weaker volumes in the Americas, Europe and Asia. Carrier also divested its Fire & Security businesses and, on October 1, 2024, its Commercial Refrigeration business, so we measure the business as it stands today, using cash flow from continuing operations only. How we measure earning power: we start from operating cash flow, remove swings in receivables, inventories and payables, subtract stock compensation as a real cost, and subtract the portion of capital spending needed just to maintain the business ($392 million in 2025). On that basis earnings per share were $1.58 in 2022, $1.49 in 2023, $0.77 in 2024 and $2.34 in 2025. The 2024 figure includes a $357 million outflow in other operating items (the year Viessmann was acquired); the filing does not break that item down further, so we could not fully explain it. Some of 2025 was helped by $201 million of cash distributions from joint ventures (versus $46 million in 2024), which may not repeat. We therefore use the median of the four years since the businesses were reshaped, about $1.54 per share, rather than the latest year. In the most recent quarter (first quarter of 2026) operating cash flow from continuing operations was $66 million versus $488 million a year earlier; a single quarter does not move our estimate, but we note it as something to watch. Owner earnings growth in 2025 was very high (from $0.77 to $2.34) only because 2024 was a trough, and we assume no growth from the $1.54 level. Amortization of acquired intangibles is large: depreciation and amortization was $1.27 billion against $392 million of capital spending, and it is added back because it is non-cash. Because acquired customer and technology assets do wear out, none of our three cases extends earnings forever at full strength; each fades after year 10. Base case ($21 per share): earnings hold flat at about $1.54 per share for ten years, then decline about 3% a year. What supports this: an installed base of Carrier, Viessmann and Transport Refrigeration equipment that must be serviced and eventually replaced, and positive owner earnings in each of 2022 to 2025. No growth is credited: we do not assume heat-pump adoption, share gains, or margin expansion, since none is contracted or proven. Bear case ($10.50 per share): earnings stay near the 2024 level of about $0.85 per share for ten years, then decline about 5% a year. This reflects weaker end-market volumes already seen in 2025 (gross profit down 6% to $5.6 billion), and $11.5 billion of long-term debt at year-end 2025 that leaves less room if cash flow stays low. Debt is not subtracted separately because interest is already paid out of the cash flow we measure. Bull case ($27 per share): earnings return to about $2.00 per share, below the $2.34 of 2025 (which we do not treat as normal), and hold flat for ten years, then decline about 3% a year. This requires only a return to roughly the cash generation the company showed in 2025, not new products or market growth. What would make this wrong: a lasting fall in HVAC volumes or margins in Europe's heating market, further large acquisitions that destroy value, or cash flow that stays near the 2024 and early 2026 levels. We tested the base case against the 2024 result, when owner earnings fell to $0.77; the bear case is built on that level. We weighted the case toward a conservative margin of safety because of the leverage and the cyclical, demand-sensitive nature of the business.