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Why Is Honeywell (HON) Up 6.2% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Honeywell International Inc. (HON - Free Report) . Shares have added about 6.2% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Honeywell Beats on Q1 Earnings, Revenue Estimates
Honeywell's first-quarter 2017 adjusted earnings as well as revenues surpassed the Zacks Consensus Estimates by 2.5% and 1.7%, respectively. Notably, share price of the stock climbed on a pre-market trading basis, reflecting positive sentiments stemming from the better-than-expected result.
Earnings
Quarterly adjusted earnings came in at $1.66 per share, higher than the Zacks Consensus Estimate of $1.62. The bottom line also comfortably surpassed the year-ago tally of $1.50 per share.
The quarterly GAAP earnings per share of $1.71 exceeded the year-ago tally by 9.6%. The company noted that this upside was driven by solid operational performance delivered during the quarter.
Revenues
Net sales during the quarter came in at $9,492 million, down 0.3% year over year. The downside was stemmed by adverse foreign currency translation impact and divestiture of the Resins and Chemicals, and Aerospace government services businesses in 2016.
However, the company mentioned that organic sales during the quarter were up 2% year over year. However, the top line surpassed the Zacks Consensus Estimate of $9,332 million.
Costs and Margins
Total cost of goods sold during the quarter was $6,356 million, down 2.9% year over year. Selling, general and administrative expenses came in at $1,349 million, up 5.4% year over year. Interest expenses and other financial charges during the quarter were $75 million compared with $85 million reported in the year-ago quarter.
Segmental profit margin was 18.8%, up 70 basis points (year over year). Operating income margin expanded 100 bps to 18.8%.
Segment Performance
Honeywell International reports results in terms of four business segments:
Home and Building Technologies’ revenues were $2,553 million, up 3.1% year over year. The upside was backed by the benefits accrued from product launches, and robust distribution, air and water products business in China.
Safety and Productivity Solutions’ revenues totaled $1,324 million, up 25% year over year. The year-over-year growth was driven by higher volumes in workflow solutions and safety products businesses.
However, revenues of Aerospace sales during the quarter came in at $3,546 million, down 4.3% year over year. Also, Performance Materials and Technologies’ sales during the quarter came in at $2,069 million, down 9.3% year over year.
Balance Sheet and Cash Flow
Cash and cash equivalents as of Mar 31, 2017 were $7,710 million compared with $7,843 million recorded in Dec 31, 2016. Long-term debt was $11,181 million, down from $12,182 recorded in at the end of 2016.
At the end of the first three months of 2017, net cash from operating activities was $940 million compared with $319 million recorded in the prior-year period. Free cash flow was $772 million during the quarter compared with $125 million in the year-ago quarter.
Outlook
Honeywell International is aimed at boosting its near-term results on the back of strategic investments, greater operational efficacy and stronger demand for its diversified products. The company anticipates to report earnings within the range of $6.90–$7.10 per share for full-year 2017 (estimating 7–10% year-over-year growth).
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter compared to one lower.
At this time, Honeywell's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Honeywell (HON) Up 6.2% Since the Last Earnings Report?
It has been about a month since the last earnings report for Honeywell International Inc. (HON - Free Report) . Shares have added about 6.2% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Honeywell Beats on Q1 Earnings, Revenue Estimates
Honeywell's first-quarter 2017 adjusted earnings as well as revenues surpassed the Zacks Consensus Estimates by 2.5% and 1.7%, respectively. Notably, share price of the stock climbed on a pre-market trading basis, reflecting positive sentiments stemming from the better-than-expected result.
Earnings
Quarterly adjusted earnings came in at $1.66 per share, higher than the Zacks Consensus Estimate of $1.62. The bottom line also comfortably surpassed the year-ago tally of $1.50 per share.
The quarterly GAAP earnings per share of $1.71 exceeded the year-ago tally by 9.6%. The company noted that this upside was driven by solid operational performance delivered during the quarter.
Revenues
Net sales during the quarter came in at $9,492 million, down 0.3% year over year. The downside was stemmed by adverse foreign currency translation impact and divestiture of the Resins and Chemicals, and Aerospace government services businesses in 2016.
However, the company mentioned that organic sales during the quarter were up 2% year over year. However, the top line surpassed the Zacks Consensus Estimate of $9,332 million.
Costs and Margins
Total cost of goods sold during the quarter was $6,356 million, down 2.9% year over year. Selling, general and administrative expenses came in at $1,349 million, up 5.4% year over year. Interest expenses and other financial charges during the quarter were $75 million compared with $85 million reported in the year-ago quarter.
Segmental profit margin was 18.8%, up 70 basis points (year over year). Operating income margin expanded 100 bps to 18.8%.
Segment Performance
Honeywell International reports results in terms of four business segments:
Home and Building Technologies’ revenues were $2,553 million, up 3.1% year over year. The upside was backed by the benefits accrued from product launches, and robust distribution, air and water products business in China.
Safety and Productivity Solutions’ revenues totaled $1,324 million, up 25% year over year. The year-over-year growth was driven by higher volumes in workflow solutions and safety products businesses.
However, revenues of Aerospace sales during the quarter came in at $3,546 million, down 4.3% year over year. Also, Performance Materials and Technologies’ sales during the quarter came in at $2,069 million, down 9.3% year over year.
Balance Sheet and Cash Flow
Cash and cash equivalents as of Mar 31, 2017 were $7,710 million compared with $7,843 million recorded in Dec 31, 2016. Long-term debt was $11,181 million, down from $12,182 recorded in at the end of 2016.
At the end of the first three months of 2017, net cash from operating activities was $940 million compared with $319 million recorded in the prior-year period. Free cash flow was $772 million during the quarter compared with $125 million in the year-ago quarter.
Outlook
Honeywell International is aimed at boosting its near-term results on the back of strategic investments, greater operational efficacy and stronger demand for its diversified products. The company anticipates to report earnings within the range of $6.90–$7.10 per share for full-year 2017 (estimating 7–10% year-over-year growth).
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter compared to one lower.
Honeywell International Inc. Price and Consensus
Honeywell International Inc. Price and Consensus | Honeywell International Inc. Quote
VGM Scores
At this time, Honeywell's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.