Honeywell Poised to Post Record Fourth Quarter Revenues



Honeywell’s 4Q17 revenue estimates

Honeywell (HON) is expected to report revenues of $10.8 billion in 4Q17, a 7.6% increase over the corresponding quarter last year. In 4Q16, HON reported revenues of $10.0 billion. If HON manages to meet expectations, it will be the highest fourth-quarter revenue ever. This will also mark a CAGR (compound annual growth rate) of 2.3% since 2012 for the fourth quarter.

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Driving factors

Honeywell’s projected revenue growth is expected to be driven by organic growth, revenue from the acquisition, and possible currency gains. Honeywell’s UOP business reported strong growth in 3Q17, which is expected to continue. During the fourth quarter, HON’s UOP business signed deals with Empresa Nacional del Petroleo (or ENAP) refinery of Chile, Producers Midstream, Hengli Petrochemical, EagleClaw Midstream Ventures, and Kuwait Integrated Petroleum Industries Company.

HON’s Aerospace segment is also expected to grow with new business wins. For example, the company added Royal Jordanian Airlines to its connected aircraft GoDirect fuel efficiency service. HON also signed a 15-year maintenance and support agreement with Emirates. Plus, it signed a deal with Lufthansa Technik to become the licensed component repair center for Airbus 350 fleets.

HON’s revenue growth is expected to continue due to the acquisition of SCAME Sistemi, a leading provider of all-in-one systems for fire and gas detection. Favorable currency exchange is another factor that could push HON’s revenue up. In 4Q17, the US dollar fell 1.0% against the basket of currencies.

Investors can indirectly hold Honeywell by investing in the PowerShares Aerospace & Defense Portfolio (PPA), which has invested 6.8% of its portfolio in Honeywell. The other holdings of the fund include Boeing (BA), United Technologies (UTX), and Lockheed Martin (LMT), which have weights of 7.6%, 7.0%, and 6.9%, respectively, as of January 22, 2018.


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