Does Honeywell Deserve More for This Earnings Beat?

When Honeywell International Inc. (NYSE: HON) reported its most recent quarterly results before the markets opened on Friday, it posted $2.12 in earnings per share (EPS) and $10.92 billion in revenue. The consensus estimates had called for $2.01 in EPS and revenue of $10.8 billion. In the same period of last year, Honeywell said it had EPS of $1.80 on $10.08 billion in revenue.

Looking ahead to the 2018 full year, the company expects to see EPS in the range of $8.05 to $8.15 and revenues between $43.1 billion and $43.6 billion. The consensus estimates call for $8.00 in EPS and $43.05 billion in revenue for the full year.

In terms of its segments, the company reported for the latest quarter:

  • Aerospace revenues increased 10% year over year to $4.06 billion.
  • Home and Building Technologies revenues increased 5% to $2.55 billion.
  • Performance Materials and Technologies revenues increased 5% to $2.70 billion.
  • Safety and Productivity Solutions revenues increased 13% to $1.62 billion.

Darius Adamczyk, board chair and chief executive of Honeywell, commented:

Honeywell delivered another outstanding quarter with continued top-line growth, strong margin expansion, and double-digit earnings per share and free cash flow growth. Organic sales grew 6 percent, driven by continued strength in Aerospace; demand for Intelligrated warehouse automation solutions; and growth in residential thermal solutions, thermostats and ADI global distribution in our Homes business. We also saw continued robust short-cycle demand for our process automation solutions. The increased volumes, combined with our operational excellence initiatives, drove 60 basis points of segment margin expansion, above the high end of the guidance we provided in April. Our operational performance resulted in earnings per share2 (excluding separation costs and other items) of $2.12, up 18 percent, exceeding the high end of our guidance range.

Shares of Honeywell were last seen up more than 2% at $150.89, with a consensus analyst price target of $173.59 and a 52-week trading range of $133.70 to $165.13.

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