Could Honeywell Be Set to Soar?



Honeywell’s second-quarter EPS

Honeywell (HON) reported its Q2 2018 earnings today, before the market opened. HON’s adjusted EPS rose 18% YoY (year-over-year) to $2.12 from $1.80, beating analysts’ estimate of $2.01 significantly. Its EPS were boosted by higher sales, better operational control over expenses as a percentage of sales, and aggressive share buybacks.

In the second quarter, Honeywell’s revenue grew 8.3% YoY (year-over-year) to $10.91 billion, beating analysts’ estimate of $10.81 billion. Its revenue grew across all segments, led by Safety and Productivity Solutions and Aerospace.


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Stock price reaction

HON stock has risen 2.4% today, driven by its earnings beat and upward guidance revision. Meanwhile, peers United Technologies (UTX), Textron (TXT), and Boeing (BA) have returned 0.1%, 0.7%, and 0.1%, respectively.


Honeywell’s strong growth prompted it to revise its fiscal 2018 guidance upward, to revenue of $43.1 billion–43.6 billion from $42.7 billion–$43.5 billion, and EPS of $8.05–$8.15 from $7.85–$8.05. HON expects free cash flow of $5.6 billion–$6.2 billion in fiscal 2018. We’ll soon release a more detailed analysis of HON’s Q2 2018 earnings. Investors can indirectly hold Honeywell through the PowerShares Aerospace & Defense ETF (PPA), which has invested 6.9% of its portfolio in Honeywell.


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