Carrier’s Earnings Were Strong. The Stock Got Hammered.

Residential orders for Carrier equipment were well below the year-earlier level. (Dreamstime)

Carrier Global stock fell significantly on Tuesday even though the heating, ventilation, and air-conditioning company reported second-quarter results that looked, well, fine.

The company disclosed earnings per share of 92 cents from sales of $6.1 billion. Wall Street was looking for 91 cents and $6.1 billion, respectively, according to FactSet. A year ago, in the second quarter of 2024, Carrier reported EPS of 73 cents and sales of $5.9 billion.

Management stuck with its financial guidance for the full year. Carrier expects sales of about $23 billion and earnings per share of about $3.05, while Wall Street currently projects just over $23 billion in sales and EPS of $3.05.

Things looked about as expected. Jefferies analyst Stephen Volkmann called the quarter “in line” in a Tuesday report. He rates shares Buy and has a $100 price target for the stock.

Still, Carrier stock dropped 10.6% to $71.67 on Tuesday. The S&P 500 and Dow Jones Industrial Average fell 0.3% and 0.5%, respectively.

It’s a big dip, considering the headline numbers. Carrier’s guidance implies second-half EPS of about $1.48 a share, while Wall Street has projected $1.50. That two-cent difference shouldn’t cause a big drop.

Shares have been strong lately, up about 17% year to date, beating the S&P 500 by about eight percentage points coming into Tuesday trading. Shares were also up about 32% over the past three months.

That kind of strength can create high expectations, which is one potential reason for the dip.

Another is the continuing weakness in U.S. residential markets. Americas residential orders were down 60% year over year. Still, a weak U.S. housing market isn’t a surprise, and commercial business picked up the slack, helping the company maintain its guidance.

Sometimes investors want to take profits. The precise reason can be hard to suss out.

Write to Al Root at allen.root@dowjones.com