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Honeywell’s Revenue: Could 1Q18 Be Its Best-Ever 1st Quarter?

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Honeywell’s 1Q18 revenue estimates

Honeywell (HON) is expected to report revenue of $10.0 billion in 1Q18, representing a 5.7% increase from 1Q17’s $9.5 billion. If HON manages to meet expectations, it will achieve its highest first-quarter revenue ever, and mark a first-quarter CAGR (compound annual growth rate) of 1.5% since 2013.

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Driving factors

Honeywell’s projected revenue growth is expected to be driven by organic growth, acquisition revenue, and currency gains. Honeywell’s UOP (Universal Oil Products) business reported strong growth of 12% in 4Q17, and this trend is expected to continue in 1Q18. During the first quarter of 2018, HON’s UOP business signed several deals, with UkrGasVydobuvannya in Ukraine, Brazos Midstream, MarkWest’s Hopedale Plant, Sinopec Beijing Yanshan Petrochemical and many more.

The aerospace segment is also expected to do well, with new business wins. In 1Q18, HON supplied cockpit technology to United Airlines for its new Boeing (BA) 737 MAX, joining Comair as a HON cockpit technology client. International Airlines Group adopted GoDirect software in its fleet of more than 500 aircraft. Also, HON expects 4,000–4,200 new helicopters to be delivered in the next five years.

The acquisition of SCAME Sistemi is expected to add to Hon’s revenue growth, and HON may benefit from continued weakness in the US dollar. The dollar index, which measures the US dollar against a basket of currencies, fell 2.1% in 1Q18.

Investors can indirectly hold Honeywell by investing in the PowerShares Aerospace & Defense Portfolio (PPA), which has invested 7.1% of its portfolio in Honeywell. The fund’s other holdings include United Technologies (UTX) and Lockheed Martin (LMT), which had weights of 6.9% each as of April 13, 2018.

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