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MarketScreener Homepage  >  Equities  >  Nyse  >  Honeywell International Inc.    HON

HONEYWELL INTERNATIONAL INC.

(HON)
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Honeywell International : Offers Cautious View, Trims Sales Outlook

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10/18/2019 | 02:49am EST

Adjusted earnings beat forecasts but company is cautious about economy

By Thomas Gryta and Dave Sebastian 

Honeywell International Inc.'s third-quarter profit dropped 30% because of spinoffs during the past year, and the industrial conglomerate tempered its sales forecast as the group monitors economic uncertainty.

The company -- with products as diverse as rubber boots and water-processing systems -- said adjusted sales rose 10% in its aviation business as that sector continues to thrive. Honeywell nudged down the top end of its full-year sales outlook and boosted the lower end of its adjusted earnings estimate.

"We remain somewhat cautious in our outlook given the continued uncertainty in the macro environment, and the full year continues to be solidly on track," Honeywell Chief Executive Darius Adamczyk said on a Thursday conference call with analysts.

Shares in Honeywell rose 2.4% to $167.52 on Thursday.

Honeywell's third-quarter profit fell to $1.62 billion, or $2.23 a share, compared with $2.34 billion, or $3.11 a share, a year earlier. Earnings increased 9% after adjustments, exceeding analysts' expectations, according to FactSet. Sales declined 16% to $9.09 billion, below analysts' expectations of $9.12 billion.

The declines come after Honeywell shed its home-security products and transportation-systems businesses last year. The company said organic sales, which exclude currency moves, acquisitions and divestitures, rose 3%.

Honeywell said sales in its aerospace business, its largest segment, declined 12% to $3.54 billion, but rose 10% on an organic basis, citing strength in the defense and space portion of the business. The division makes a range of aerospace systems and technology, from electric power systems to engine controls.

The company again said it hasn't been hurt significantly by the continued grounding of Boeing Corp.'s 737 MAX jets and doesn't expect any impact for 2019. Honeywell remains "aligned to Boeing's stated production schedule for the 737 MAX and we'll continue to monitor the situation closely," Chief Financial Officer Greg Lewis said on the conference call.

Honeywell, based in Charlotte, N.C., lowered the top end of its 2019 sales outlook to $36.9 billion, down from a prior forecast of as much as $37.2 billion.

The company also increased the bottom end of its adjusted-profit forecast, which is now $8.10 a share compared with $7.95 a share previously.

Gordon Haskett analyst John Inch said Honeywell seems to be showing signs of looming economic strain in its fourth-quarter projection for per-share earnings of $2 to $2.05. He said the projection is below analyst expectations of $2.06 a share.

Mr. Inch added that Honeywell is positioning itself to benefit in a slowing economic environment.

Honeywell said it faces uncertainty in the broader economic and industrial cycles, stressing that it is prepared for a range of outcomes for the rest of the year. On its conference call, it made similar assurances for 2020 as it predicted continuing economic uncertainty, trade instability and risk from Europe and the U.K.'s planned exit from the European Union.

Executives highlighted Honeywell's cash position and ability to access capital for acquisitions or stock buybacks. While it continues to talk up potential deals, Honeywell has shied away from large transactions and mostly focused on buying its own shares, spending $3.7 billion on buybacks so far this year.

"We have a robust playbook with multiple levers to protect profit in the event of a market slowdown," Mr. Adamczyk said Thursday, "and significant balance-sheet flexibility to generate strong returns."

Micah Maidenberg contributed to this article.

Write to Thomas Gryta at thomas.gryta@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
BOEING COMPANY (THE) 1.34% 371.34 Delayed Quote.15.01%
HONEYWELL INTERNATIONAL INC. 0.15% 176.79 Delayed Quote.34.14%
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Financials (USD)
Sales 2019 36 796 M
EBIT 2019 7 704 M
Net income 2019 6 007 M
Debt 2019 6 273 M
Yield 2019 1,89%
P/E ratio 2019 21,5x
P/E ratio 2020 20,1x
EV / Sales2019 3,60x
EV / Sales2020 3,45x
Capitalization 126 B
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Technical analysis trends HONEYWELL INTERNATIONAL IN
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 184,27  $
Last Close Price 176,79  $
Spread / Highest target 13,1%
Spread / Average Target 4,23%
Spread / Lowest Target -7,80%
EPS Revisions
Managers
NameTitle
Darius Adamczyk Chairman & Chief Executive Officer
Gregory P. Lewis Chief Financial Officer & Senior Vice President
Krishna Mikkilineni SVP-Engineering Operation & Information Technology
Jaime Chico Pardo Lead Independent Director
Clive Richard Hollick Independent Director
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