Global diversified technology and manufacturing company Honeywell International Inc (HON - Analyst Report) offered a tepid outlook for 2014. Expectations that the macroeconomic environment next year may be similar to 2013 resulted in a cautious outlook.
Nevertheless, the company expects sales, profit margins and earnings to increase during the ensuing year. The company also reiterated its 2013 guidance.
Honeywell affirmed its 2013 guidance with earnings per share of $4.90 to $4.95. The current Zacks Consensus Estimate is pegged in unison at $4.95. Sales expectation in 2013 was confirmed between $38.8 billion and $39 billion.
Honeywell expects sales of $40.3 billion-$40.7 billion in 2014. Despite the challenging environment, the company’s balanced mix of long- and short-cycle businesses, along with organic growth in new products and expansion in high-growth regions augur well on a long-term perspective.
The operational improvements coupled with strong productivity and lucrative investments are all expected to contribute to healthy margin expansion in the long run. The company has already achieved the low end of its margin target in 2013 and expects operating margins for 2014 in the range of 15.3%-15.6%.
Honeywell expects earnings per share in the range of $5.35 -$5.55 in 2014, which represents earnings growth of 8.0%-12.0%. The current Zacks Consensus Estimate is pegged at $5.55 a share.
Recently, Honeywell authorized a share repurchase program under which it can repurchase up to $5 billion worth of shares over a period of time through open market transactions. The strategic move signifies an inherent strength in the company’s balance sheet and working capital management that gives it enough confidence to generate adequate cash flow to deliver shareholder value. The company expects free cash flow for 2014 in the range of $3.8 billion -$4.0 billion, which represents growth of 4.0% -9.0%.
Honeywell is a global diversified technology and manufacturing company with a wide range of aerospace products and services, control, sensing and security technologies for buildings, homes and industry, turbochargers, automotive products, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals, and energy efficient products and solutions for homes, business and transportation.
Honeywell currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include ITT Corporation (ITT - Analyst Report), Hutchison Whampoa Ltd and Raven Industries Inc (RAVN - Analyst Report). All these stocks carry a Zacks Rank #2 (Buy).