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Why Wall Street Is Optimistic about Honeywell after 1Q17 Results

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Part 2
Why Wall Street Is Optimistic about Honeywell after 1Q17 Results PART 2 OF 7

Why Did Honeywell’s Revenue Fall in 1Q17?

Honeywell’s 1Q17 revenue

Honeywell (HON) reported revenue of $9.49 billion in 1Q17, a decline of 0.3% year-over-year as compared to $9.52 billion in 1Q16. However, on an organic basis, revenues rose 2%. HON still managed to beat Wall Street analysts’ estimate of $9.3 billion. Since 2013, Honeywell’s revenue has largely remained in the range of $9.2 billion to $9.7 billion.

Why Did Honeywell&#8217;s Revenue Fall in 1Q17?

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Honeywell’s revenue decline was primarily driven by weak performances from its Aerospace Segment and its Performance Material and Technologies segments, which fell 4% and 9%, respectively. However, a strong performance by the Safety and Productivity Solutions segments offset these declines. We’ll discuss Honeywell’s individual segment performance in the upcoming parts of this series.

CEO’s remarks

Darius Adamczyk, president and CEO of Honeywell, said, “The commercial aftermarket within Aerospace and the global distribution business within Home and Building Technologies remained strong. In Performance Materials and Technologies, robust demand for Solstice low-global-warming products drove double-digit organic growth in Advanced Materials, and improving conditions in the oil and gas industry bolstered ongoing strength in UOP. In Safety and Productivity Solutions, demand for warehouse solutions and industrial safety products enabled growth in the quarter.”

Peer comparison

Honeywell’s peer General Electric (GE) reported 1Q17 revenues of $27.7 billion. Textron (TXT) posted 1Q17 revenues of $3.1 billion, implying a decline of approximately 3.1% year-over-year. United Technologies (UTX) is yet to announce its 1Q17 earnings.

Investors can indirectly hold Honeywell by investing in the Industrial Select Sector SPDR Fund (XLI), which invests 4.8% of its holdings in Honeywell as of April 24, 2017.

In the next part, we’ll look into the performance of Honeywell’s reporting segment in 1Q17.

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