Industrial firm
Honeywell International
reported third-quarter earnings that beat estimates. Guidance was fine, too.
After a relatively weak year for
Honeywell
stock (ticker: HON), investors will be hoping for a post-earnings bounce. They might not get it. Investors can blame the market.
Honeywell earned $2.27 per share on sales of $9.3 billion. Wall Street had expected earnings of $2.23 per share on sales of $9.2 billion. A year ago in the 2022 third quarter, Honeywell earned $2.25 per share on sales of just under $9 billion.
Honeywell also narrowed the earnings-per-share guidance range for 2023 to $9.10 to $9.20, keeping a midpoint of $9.15. That implies fourth-quarter earnings per share of about $2.60, while the consensus estimate is just under $2.60, according to FactSet.
Sales for 2023 are still expected to be about $37 billion, up about 5% from 2022 on a comparable basis.
Honeywell’s long-term goal is to grow sales 4% to 7% a year on average. This year will be at the lower end of that range, partly because the global industrial economy is relatively weak.
Management’s goal for segment operating-profit margins is 25%. This year, Honeywell is expected to produce average profit margins of about 22.5%.
The third quarter is also the first quarter of a new reporting structure for the company. Honeywell’s four operating segments are now Aerospace Technologies, Industrial Automation, Building Automation, as well as Energy and Sustainability Solutions.
The segments are similar to its previous business units, but part of the energy business is being moved to Industrial Automation. The changes will make comparability a little harder for a couple of quarters.
Through Wednesday’s close, Honeywell stock is down about 6% over the past 12 months, while the
S&P 500
and
Dow Jones Industrial Average
are up about 9% and 4%, respectively.
It’s tough to blame all the underperformance on the company. Honeywell has beaten Street estimates in this year’s first, second, and third quarters. It raised guidance after the first and second quarterly reports.
RBC analyst Deane Dray noted in a preview report that Honeywell stock has underperformed those of peers by a couple of percentage points over the past few weeks, and shares are at the lower end of their historic valuation range.
That isn’t a bad setup for investors. Still, Honeywell shares are down about 1.2% in premarket trading. The market deserves some blame. S&P 500 and
Nasdaq Composite
futures are down 0.8% and 1%, respectively.
Management hosts a conference call at 8:30 a.m. ET.
Write to Al Root at [email protected]
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