Honeywell Rises on Better-Than-Expected Results

Company increased sales, earnings guidance for the year

Author's Avatar
Jul 21, 2017
Article's Main Image

Honeywell International Inc. (HON, Financial) posted its second-quarter results on July 21, beating both earnings and revenue estimates.

Earnings per share of $1.80 surpassed estimates of $1.78 and increased 6% from the comparable quarter of 2016. Likewise, revenue of $10.08 billion surpassed estimates of $9.8 billion and was up from $9.9 billion in the prior-year quarter.

Following the announcement, shares rose to $136.48 in Friday morning trading. Honeywell closed at $134.95 on Thursday.

The company’s aerospace and performance materials and technologies businesses performed above expectations, resulting in a 5.5% increase in profit for the quarter.

The aerospace business’ sales fell about 3%, smaller than the anticipated 5% to 7% decline. Sales in the performance materials and technologies segment tumbled 8%. The company had forecasted a decline of 10% to 12%.

Honeywell President and CEO Darius Adamczyk said the improved performance in these segments was due to “investments in production capacity.”

“For example, our newly completed facilities within Performance Materials and Technologies are contributing to double-digit growth for our Solstice line of low-global-warming products and strong orders, sales and backlog growth in UOP," Adamczyk said. "We are also pleased with the continued strength in Aerospace Commercial Aftermarket and in Safety and Productivity Solutions, where we continue to see strong demand for safety products and voice-enabled workflow solutions."

The company’s net income increased to $1.39 billion from $1.32 billion.

The chart below illustrates the company’s revenue growth since 1988.

2118810426.png

Honeywell raised the lower end of its earnings guidance for the full year by 10 cents. The company now anticipates earnings per share to come in between $7 and $7.10. The company also expects 2017 sales to range between $39.3 billion and $40 billion, up from the previous guidance of $38.6 billion to $39.5 billion.

Adamczyk said the company expects momentum in its organic sales growth to continue throughout the remainder of the year due to strong order rates and a growing backlog.

"Our focus on delivering organic growth while maintaining productivity rigor and aggressively deploying capital, combined with our efforts to evolve as a world-class software-industrial company, is delivering results for our shareowners,” Adamczyk said.

With 0.96% of outstanding shares, Barrow, Hanley, Mewhinney & Strauss is Honeywell’s largest guru shareholder. A total of 23 gurus own the stock.

Disclosure: I do not own any stocks mentioned in the article.