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Honeywell’s Q4 Revenues Could Decline

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Jan. 31 2019, Updated 10:50 a.m. ET

Honeywell’s Q4 revenue expectations

Analysts expect Honeywell (HON) to report revenues of $9.70 billion in the fourth quarter, which represents a decline of 10.5% compared to the fourth quarter of 2017 when it reported revenues of $10.84 billion. Honeywell’s revenues are is expected to decline after an upward trend for the first time in the past three years.

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Reasons for the decline

Two spin-offs in the third quarter impacted the decline in Honeywell’s expected revenues. On October 1, Honeywell completed the spin-off of its transportation business, which now trades as “Garrett Motion” (GTX). On October 29, Honeywell completed the spin-off of Resideo Technologies (REZI), which was Honeywell’s former Homes and ADI Global Distribution business. The strong dollar is expected to have a negative impact on Honeywell’s revenues. In the past six months, the US Dollar Index, which tracks the dollar’s movement against the basket of currencies, has gained 1.8%.

Honeywell’s revenues could receive a boost due to the acquisition revenue. Honeywell completed the acquisition of Transnorm. During the quarter, Honeywell got several new orders, which could drive its organic revenue growth.

Investors could hold Honeywell indirectly by investing in the PowerShares Aerospace & Defense ETF (PPA), which has invested 6.7% of its portfolio in Honeywell. The fund’s other holdings include Boeing (BA), United Technologies (UTX), and Lockheed Martin (LMT) with weights of 7.7%, 6.4%, and 6.9%, respectively, as of January 30.

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