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Honeywell Beats Estimates Again in Q3 2018: Stock Rises

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Honeywell reports Q3 2018 earnings

Honeywell (HON) announced its third-quarter earnings today before the market opened. It reported adjusted EPS of $2.03, an increase of 16.7% year-over-year, and beat Wall Street analysts’ expectation of $1.99.

Honeywell’s growth in adjusted EPS was driven by strong segment profits and a lower share count. In the third quarter, it bought ~$600 million worth of shares. At the end of the third quarter, its outstanding shares were 752 million compared to 771.4 million in Q3 2017. A lower effective tax rate of 21.9% compared to 23.4% also drove up its adjusted EPS.

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Honeywell reported record third-quarter revenue of $10.76 billion, an increase of 6.3% year-over-year. Its revenue beat analysts’ estimate of $10.75 billion. Revenue growth was seen across all its reporting segments, led by Safety and Productivity Solutions, which grew 12%, followed by Aerospace with a 10% growth.

Stock price reaction and guidance

In the pre-market opening, HON stock rose 3%. However, at the time of this writing, HON was trading 0.6% higher than its previous day’s closing price. Its industrial peers General Electric (GE), 3M (MMM), and Stanley Black & Decker (SWK) were trading 2.2%, 0.1%, and 0.3% higher, respectively.

HON now expects its adjusted EPS for 2018 to be $7.95–$8. It reduced the guidance due to the spin-off. Its earlier guidance was $8.05–$8.15.

Investors can indirectly hold Honeywell through the PowerShares Aerospace & Defense ETF (PPA), which has invested 7% of its portfolio in Honeywell as of October 18.

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