Honeywell Misses the Mark Despite Q4 Earnings Beat

When Honeywell International Inc. (NYSE: HON) reported its most recent quarterly results before the markets opened on Friday, the company posted $2.06 in earnings per share (EPS) and $9.50 billion in revenue. The consensus estimates had called for $2.04 in EPS and $9.61 billion in revenue, and the fourth quarter of last year reportedly had $1.91 in EPS and $9.73 billion in revenue.

During the fourth quarter, sales were down 2% on a reported basis and up 2% on an organic basis. The difference between reported and organic sales primarily relates to the spin-off of the former Homes and ADI Global Distribution business (formerly in Honeywell Building Technologies).

In terms of its segments, Honeywell reported as follows:

• Aerospace net sales increased 7% organically year over year to $3.66 billion.
• Honeywell Building Technologies net sales decreased 19% to $1.46 billion, an increase of 1% organically.
• Performance Materials and Technologies net sales increased 2% organically to $2.86 billion.
• Safety and Productivity Solutions net sales decreased 11% organically to $1.52 billion.

Looking ahead to the 2020 full year, Honeywell expects to see EPS in the range of $8.60 to $9.00 and sales of $36.7 billion to $37.8 billion. Consensus estimates are calling for $8.14 in EPS and $36.82 billion in revenue.

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Darius Adamczyk, board chair and chief executive officer of Honeywell, commented:

We finished 2019 with a strong fourth quarter. Organic sales were up 2% for the quarter and up 5% for the full year, driven by continued strength across Aerospace, growth in Process Solutions, and demand for commercial fire, security and building management products. We also had strong bookings in Intelligrated again, up over 100% in the fourth quarter. Our growth and productivity rigor, in addition to the impact of the 2018 spin-offs, drove 130 basis points of segment margin expansion in the quarter, and 150 basis points for the full year.

Shares of Honeywell traded down nearly 2% early Friday at $174.78, in a 52-week range of $144.34 to $184.06. The consensus price target is $188.95.

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