We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Despite a challenging macroeconomic environment, Honeywell International Inc. (HON - Free Report) reported relatively modest fourth-quarter 2016 results. Quarterly adjusted earnings per share (EPS) came in at $1.74, in line with the Zacks Consensus Estimate, but up from $1.53 in the year-ago quarter.
GAAP EPS for the quarter was $1.34 per share compared with $1.54 in the year-ago quarter.
Fourth-quarter revenues were flat at $9,985 million, compared with $9,982 million in the year-ago quarter. However, the revenues missed the Zacks Consensus Estimate of $10,152 million. Organic revenue growth was down 1% year over year due to the spin-off of Resins and Chemicals in Performance Materials and Technologies and the divestiture of the Aerospace government services business. The decline was partially offset by acquisitions of Elster and Intelligrated.
For full-year 2016, the company reported adjusted earnings of $6.60 per share compared with prior-year’s earnings of $6.10. Revenues for the full year were $39,302 million compared with $38,581 million in the prior year. The improvement in revenues was primarily attributable to the superior performance of the Home and Building Technologies and Performance Materials and Technologies segments.
Operational Details
Total segment’s profit was $1,899 million compared with $1,880 million in the year-ago quarter. Overall segment profit margin slightly improved to 19.0% from 18.8% in the prior-year period, an increase of 20 basis points (bps).
Operating income (excluding pension mark-to-market adjustment and debt refinancing expense) increased to $2,012 million from $1,800 million in fourth-quarter 2015. Operating margin during the quarter was 16.2%, down 120 bps.
Segmental Performance
Aerospace sales were $3,666 million in the reported quarter, down 8% year over year. The downside was due to lower volumes in Business and General Aviation, program accomplishment of the international defense and U.S. Space businesses and weakness in commercial helicopter trade.
Home and Building Technologies sales came in at $2,800 million, up 13% year over year. The upside was driven by robust Distribution and Building Solutions businesses, double-digit growth in China and India, as well as new product introductions in Environmental and Energy Solutions.
Performance Materials and Technologies revenues were $2,228 million, down 5% year over year.
Safety and Productivity Solutions’ top line was $1,291 million, up 9% year over year. This is due to restructuring benefits and commercial excellence, partially offset by lower volumes across the portfolio.
Balance Sheet and Cash Flow
Cash and cash equivalents as of Dec 31, 2016 were $7,843 million compared with $5,455 million in the year-ago period. Long-term debt was $12,182 million compared with $5,554 million in the year-ago period.
Net cash from operating activities for the three months ended Dec 31, 2016, was $2,042 million compared with $1,963 million in the prior-year period. Free cash flow was $1,696 million during the quarter compared with $1,575 million in the year ago quarter.
Guidance Reiterated
Honeywell aims to improve its revenues and margins in the upcoming quarters backed by greater business internationalization, innovation and product portfolio solidification. Based on favorable business conditions, the company reiterated its full-year earnings guidance.
However, Honeywell expects a tepid demand pattern for its business jets and mobile scanners in 2017 due to sluggish global growth, volatility in crude oil prices and a tempered Chinese economy. Consequently, the company projects 2017 earnings in the range of $6.85–$7.10 per share, while revenues are anticipated to be down 1% to up 2% year over year.
Honeywell International Inc. Price, Consensus and EPS Surprise
Hitachi has a long-term earnings growth expectation of 13% and is currently trading at a forward P/E of 14.7x.
Barloworld has a long-term earnings growth expectation of 18.70% and is currently trading at a forward P/E of 11.04x.
FactSet has a long-term earnings growth expectation of 10.7% and is currently trading at a forward P/E of 23.9x.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Honeywell (HON) Posts In-Line Q4 Earnings, Reaffirms View
Despite a challenging macroeconomic environment, Honeywell International Inc. (HON - Free Report) reported relatively modest fourth-quarter 2016 results. Quarterly adjusted earnings per share (EPS) came in at $1.74, in line with the Zacks Consensus Estimate, but up from $1.53 in the year-ago quarter.
GAAP EPS for the quarter was $1.34 per share compared with $1.54 in the year-ago quarter.
Fourth-quarter revenues were flat at $9,985 million, compared with $9,982 million in the year-ago quarter. However, the revenues missed the Zacks Consensus Estimate of $10,152 million. Organic revenue growth was down 1% year over year due to the spin-off of Resins and Chemicals in Performance Materials and Technologies and the divestiture of the Aerospace government services business. The decline was partially offset by acquisitions of Elster and Intelligrated.
For full-year 2016, the company reported adjusted earnings of $6.60 per share compared with prior-year’s earnings of $6.10. Revenues for the full year were $39,302 million compared with $38,581 million in the prior year. The improvement in revenues was primarily attributable to the superior performance of the Home and Building Technologies and Performance Materials and Technologies segments.
Operational Details
Total segment’s profit was $1,899 million compared with $1,880 million in the year-ago quarter. Overall segment profit margin slightly improved to 19.0% from 18.8% in the prior-year period, an increase of 20 basis points (bps).
Operating income (excluding pension mark-to-market adjustment and debt refinancing expense) increased to $2,012 million from $1,800 million in fourth-quarter 2015. Operating margin during the quarter was 16.2%, down 120 bps.
Segmental Performance
Aerospace sales were $3,666 million in the reported quarter, down 8% year over year. The downside was due to lower volumes in Business and General Aviation, program accomplishment of the international defense and U.S. Space businesses and weakness in commercial helicopter trade.
Home and Building Technologies sales came in at $2,800 million, up 13% year over year. The upside was driven by robust Distribution and Building Solutions businesses, double-digit growth in China and India, as well as new product introductions in Environmental and Energy Solutions.
Performance Materials and Technologies revenues were $2,228 million, down 5% year over year.
Safety and Productivity Solutions’ top line was $1,291 million, up 9% year over year. This is due to restructuring benefits and commercial excellence, partially offset by lower volumes across the portfolio.
Balance Sheet and Cash Flow
Cash and cash equivalents as of Dec 31, 2016 were $7,843 million compared with $5,455 million in the year-ago period. Long-term debt was $12,182 million compared with $5,554 million in the year-ago period.
Net cash from operating activities for the three months ended Dec 31, 2016, was $2,042 million compared with $1,963 million in the prior-year period. Free cash flow was $1,696 million during the quarter compared with $1,575 million in the year ago quarter.
Guidance Reiterated
Honeywell aims to improve its revenues and margins in the upcoming quarters backed by greater business internationalization, innovation and product portfolio solidification. Based on favorable business conditions, the company reiterated its full-year earnings guidance.
However, Honeywell expects a tepid demand pattern for its business jets and mobile scanners in 2017 due to sluggish global growth, volatility in crude oil prices and a tempered Chinese economy. Consequently, the company projects 2017 earnings in the range of $6.85–$7.10 per share, while revenues are anticipated to be down 1% to up 2% year over year.
Honeywell International Inc. Price, Consensus and EPS Surprise
Honeywell International Inc. Price, Consensus and EPS Surprise | Honeywell International Inc. Quote
Zacks Rank & Stocks to Consider
Honeywell currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks in the same space include Hitachi, Ltd. (HTHIY - Free Report) , FactSet Research Systems Inc. (FDS - Free Report) and Barloworld Ltd. (BRRAY - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy)Rank stocks here.
Hitachi has a long-term earnings growth expectation of 13% and is currently trading at a forward P/E of 14.7x.
Barloworld has a long-term earnings growth expectation of 18.70% and is currently trading at a forward P/E of 11.04x.
FactSet has a long-term earnings growth expectation of 10.7% and is currently trading at a forward P/E of 23.9x.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>