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Honeywell businesses touch a lot of industries, among them aerospace, energy, commercial real estate, and industrial automation.
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Honeywell International
‘s second-quarter earnings exceeded Wall Street expectations and the industrial company raised its full-year financial guidance. The stock, however, was down in early trading because the outperformance was “modest.”
Honeywell (ticker: HON) investors, obviously, care about how the stock trades but other investors should take an interest as well. Honeywell’s businesses touch most industrial end markets.
Thursday morning, Honeywell reported second-quarter earnings of $2.23 a share from sales of $9.1 billion. Wall Street was looking for earnings of $2.21 a share and sales of $9.2 billion. In the second quarter of 2022, Honeywell reported EPS of $2.10 and sales of $9 billion.
Honeywell also increased its earnings forecast for the full year, leaving it at $9.05 to $9.25. In April, management expected between $9 and $9.25 a share, up about 3% to 6% from a year earlier.
Wall Street currently projects earnings per share of $9.17 for 2023.
It was the second increase in guidance in as many quarters. Management hiked its full-year financial guidance after the first-quarter results came out. The original 2023 EPS guidance range was $8.80 and $9.20.
RBC analyst Deane Dray called the results a “modest operating beat”, adding that all financial metrics looked pretty much as expected. He rates shares Hold and has a $210 price target for the stock.
A “modest” beat might be why shares were down 4% in early trading. The
S&P 500
and
Dow Jones Industrial Average
rose 0.8% and 0.3%, respectively.
New CEO Vimal Kapur told Barron’s that long-cycle businesses are performing well and short-cycle businesses are still slow.
Long-cycle businesses are characterized by expensive items, ordered months or years in advance that take a while to build and deliver. Aerospace is a long-cycle business. Short-cycle businesses are characterized by lower-price items that have short lead times and may be sold through distribution channels. They are the businesses that react most quickly to economic conditions.
Slowness in short-cycle business means the industry economy isn’t turning a corner yet. Kapur is hopeful that 2024 will be better.
The second quarter of 2023 is Honeywell’s first since the company named Kapur as CEO. Investors now get a chance to see how Kapur’s leadership differs from his predecessor Darius Adamczyk, who was focused on software and digitization. While they shouldn’t expect wholesale changes to strategic direction, Kapur might talk more about how Honeywell affects sustainability.
Coming into the earnings report, Honeywell stock was up about 13% over the past 12 months. The S&P 500 and Dow Jones Industrial Average were up about 14% and 10%, respectively.
Write to Al Root at [email protected]
Source: https://www.barrons.com/articles/honeywell-earnings-stock-price-da604cf2?siteid=yhoof2&yptr=yahoo