Honeywell's Mixed Q3: EPS Beats, Misses On Sales, And Lowers FY24 Revenue Outlook
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 24 2024
0mins
Should l Buy HON?
Source: Benzinga
Third-Quarter Results: Honeywell reported a 6% year-over-year revenue growth to $9.728 billion, missing expectations, while adjusted EPS rose 8% to $2.58, surpassing estimates. The company also revised its FY24 sales guidance down to $38.6-$38.8 billion.
Future Outlook and Strategy: CEO Vimal Kapur highlighted ongoing portfolio optimization efforts, including plans to spin off Advanced Materials and exit the PPE business, alongside strong order rates and backlog growth, despite current sales headwinds.
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Analyst Views on HON
Wall Street analysts forecast HON stock price to rise
15 Analyst Rating
8 Buy
6 Hold
1 Sell
Moderate Buy
Current: 232.190
Low
195.00
Averages
235.07
High
262.00
Current: 232.190
Low
195.00
Averages
235.07
High
262.00
About HON
Honeywell International Inc. is an integrated operating company serving a range of industries and geographies around the world, with a portfolio that is underpinned by its Honeywell Accelerator operating system and Honeywell Forge platform. The Company provides actionable solutions for aerospace, building automation, industrial automation, process automation, and process technology. The Company supplies products, software, and services for aircrafts that it sells to original equipment manufacturers (OEM) and other customers in a variety of end markets. The Company’s portfolio of solutions and services is used in buildings worldwide for fire prevention, controls, access and security. Its offerings serve as the fundamental building blocks of industrial automation. Its sensor technologies and value-added smart edge devices offer connectivity across a variety of sensing and measurement applications. The Company offers a comprehensive portfolio of end-to-end process automation solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Mature Company Recommendations: For investors seeking exposure to these industries, Cramer recommends established companies with stable earnings and complementary business lines, such as Constellation Energy and GE Vernova, which have extensive experience in nuclear and renewable energy.
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- Amazon Cloud Business Recovery: Amazon's stock rebound highlights the importance of patience, as the market is gradually recognizing the strength of its AWS cloud division and online retail business, which are expected to continue growing in the future.
- Nvidia Market Leadership: Nvidia's leading position in the AI chip sector is paying off, and despite competitive pressures, its advantage in computing power positions it well to maintain market leadership going forward.
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- Tech Stock Strength: Major tech stocks like Apple, Meta, Broadcom, Tesla, and Microsoft propelled the index higher, while beaten-down enterprise software names such as Salesforce and ServiceNow extended their rebounds from multiyear lows, showcasing a robust recovery in the tech sector.
- Industrial Sector Pressure: The industrial sector was the worst performer in the S&P 500, with Barclays analyst highlighting that recent changes in Section 232 metal tariffs may have a larger-than-expected impact on the group, necessitating close monitoring of upcoming industrial earnings reports.
- CoreWeave Major Deal: CoreWeave announced a significant partnership with Jane Street, committing approximately $6 billion for access to next-generation computing capabilities, illustrating the broad impact of AI technology across various industries, with Nvidia's AI platform emerging as the technology of choice.
See More
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- Capacity Increase: The addition of these two production units will raise the facility's annual capacity from 18 million tonnes to 30 million tonnes, representing an increase of over 66%, further solidifying the U.S.'s position as a major supplier in the global LNG market.
- Technological Advantage: Honeywell will provide its coil wound heat exchangers and C3MR liquefaction process, aimed at improving plant efficiency and reliability; although the financial terms of the agreement remain undisclosed, the systems are designed to support continuous operation and reduce operating costs.
- Growing Global Demand: As global LNG demand continues to rise, Honeywell's modular LNG systems can shorten construction timelines, further accelerating the rapid expansion of U.S. LNG export capacity and supporting strategic goals for diversified energy supply.
See More
Investment Outlook for Honeywell and Emerson
- Dividend Appeal: Emerson Electric has raised its dividend for 69 consecutive years, making it one of the Dividend Kings, while Honeywell has increased its payout for 15 years, offering yields of 1.50% and 2% respectively, attracting income-seeking investors.
- Transformation Strategy: Honeywell is undergoing a significant transformation, planning to spin off its aerospace division in Q3, with analysts suggesting this move could unlock 'sum-of-the-parts' value for investors, allowing a sharper focus on industrial automation.
- Market Positioning: Emerson's transformation is largely complete, focusing on industrial automation and intelligent devices to help factories and power plants automate operations, appealing to conservative investors, while Honeywell is still in transition, suitable for those optimistic about its future potential.
- Valuation Comparison: Both companies share similar valuations on a forward earnings basis, so investors should choose based on personal investment goals, with Emerson being ideal for those seeking reliable income and Honeywell for those betting on its spinoff unlocking hidden value.
See More
Industrial Companies Transforming for Dividend Appeal
- Dividend Appeal: Honeywell and Emerson Electric, as leaders in industrial automation, provide steady cash flow and reliable dividends, with Honeywell offering a 2% yield and Emerson increasing dividends for 69 consecutive years, attracting income-seeking investors.
- Business Transformation: Honeywell is transforming into a software-integrated industrial giant, planning to spin off its aerospace division in Q3, a move analysts believe could unlock 'sum-of-the-parts' value for investors and enhance competitiveness in high-growth sectors.
- Market Environment: Amid the Dow Jones Industrial Average entering correction territory, companies with physical assets and essential infrastructure stand out for their pricing power and steady cash flow, with Honeywell and Emerson exemplifying this trend.
- Investment Choices: Emerson's transformation is largely complete, making it a pure play on the fourth industrial revolution and appealing to conservative investors, while Honeywell is still in transition, suitable for those optimistic about its future potential.
See More
