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Honeywell Rises on Its Q4 Earnings Beat and Better 2019 Outlook

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Honeywell beats analysts’ fourth-quarter earnings estimate

Honeywell International (HON) announced its fourth-quarter earnings results before the market opened on February 1, 2019. It reported adjusted EPS of $1.91, implying YoY (year-over-year) growth of 3.2%. It beat Wall Street’s expectation of $1.89.

Honeywell’s growth in adjusted EPS was driven by higher volumes in aerospace defense and commercial aviation along with robust growth in its Honeywell Intelligrated and advanced materials businesses. The reduction in its number of outstanding shares and its higher pension income also had positive effects on its adjusted EPS. However, the company’s higher tax rate of 22% had an adverse effect on its growth.

In the fourth quarter, Honeywell bought back ~$1.69 billion worth of shares. At the end of the fourth quarter, its outstanding shares totaled 743.9 million compared to 758.8 million in the fourth quarter of 2017.

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Honeywell reported fourth-quarter revenue of $9.73 billion, a fall of 10.3% YoY. Its revenue beat analysts’ consensus estimate of $9.70 billion. The fall was primarily the result of the company’s spin-offs of its Transportation Systems business and its ADI Global Distribution business. Excluding this, HON’s revenue rose 6%.

Stock price reaction and guidance

At around 1:30 PM EST, Honeywell stock was up 1.0% from its previous day’s closing price. Its industrial peers General Electric (GE) and 3M Company (MMM) were down 0.9% and 0.4%, respectively, while Stanley Black & Decker (SWK) was up 0.7%.

HON now expects its EPS for 2019 to be in the range of $7.80–$8.10.

Investors can indirectly hold Honeywell through the PowerShares Aerospace & Defense ETF (PPA), which has invested 6.9% of its portfolio in the stock as of January 31.

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