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Honeywell (HON) to Report Q3 Earnings: What's in the Offing?
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Honeywell International Inc. (HON - Free Report) is scheduled to report third-quarter 2021 results on Oct 22, before the opening bell.
The company delivered an earnings surprise of 4.75%, on average, in the trailing four quarters, beating estimates on all occasions. Honeywell’s second-quarter 2021 adjusted earnings of $2.02 per share surpassed the Zacks Consensus Estimate of $1.94 by 4.12%.
Image Source: Zacks Investment Research
In the past three months, shares of the company have lost 4.3% compared with the industry’s decline of 0.9%.
Key Factors
Weakness in Honeywell’s commercial original equipment business on account of challenged original equipment build rates is likely to have adversely impacted its Aerospace segment’s performance in the third quarter. Headwinds across the commercial aftermarket business, owing to the low international air transport flight hours, are also expected to have hurt the segment’s top line. Also, weakness across its defense and space business owing to the moderating U.S. defense spend and lower international defense volumes might have hurt its performance. However, strong recovery in aftermarket businesses in business aviation and air transport sectors might have supported its top-line numbers. The Zacks Consensus Estimate for the Aerospace segment’s revenues for the third quarter is currently pegged at $2,871 million, indicating growth of 3.8% from the quarter-ago number and 7.9% from the year-ago reported figure.
The company’s Performance Materials and Technologies segment is likely to have benefited from strong advanced materials sales and recovery in short-cycle process solutions and UOP businesses. However, challenged global mega projects might have affected the segment’s revenues. The consensus estimate for Performance Materials and Technology’s revenues is pegged at $2,543 million, suggesting a decrease of 0.4% from the previous quarter’s reported figure and 12.9% increase on a year-over-year basis.
Solid demand for security and electrical products, as well as building management systems is likely to have augmented its Building Technologies segment in the to-be-reported quarter. However, challenges related to the supply chain might have dragged its performance. The consensus estimate for the segment’s revenues stands at $1,419 million, implying an increase of 0.9% sequentially and 8.7% year over year.
Honeywell’s Safety and Productivity Solutions segment is anticipated to have gained from a solid backlog in the personal protective equipment business, along with strong demand for warehouse and workflow solutions and productivity solutions and services. However, supply chain constraints are likely to have played a spoilsport. The consensus mark for the segment’s revenues stands at $1,913 million, implying an 8.2% sequential decrease but growth of 21.2% on a year-over-year basis.
Escalating cost of sales and operating expenses have been a concern for the company. In the second quarter, its cost of sales rose 13.8% year over year while selling, general and administrative expenses increased 2%. High costs might have adversely impacted its margin and profitability in the third quarter as well. Also, it is expected to have incurred repositioning charges of $50-$100 million in the third quarter for executing restructuring programs. This is likely to have adversely impacted its earnings in the to-be-reported quarter.
The consensus estimate for the company’s third-quarter total revenues is currently pegged at $8,723 million, suggesting a decrease of 1% sequentially and an 11.9% increase year over year. The consensus estimate for earnings of $2.01 suggests a decline of 0.5% sequentially and a 28.8% increase from the year-ago reported number.
Honeywell International Inc. Price and EPS Surprise
According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
But that is not the case here as we will see below.
Earnings ESP: Honeywell has an Earnings ESP of -0.54%, as the Most Accurate Estimate is pegged at $2.00, lower than the Zacks Consensus Estimate of $2.01.
Zacks Rank: The company carries a Zacks Rank #4 (Sell).
Key Picks
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
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Honeywell (HON) to Report Q3 Earnings: What's in the Offing?
Honeywell International Inc. (HON - Free Report) is scheduled to report third-quarter 2021 results on Oct 22, before the opening bell.
The company delivered an earnings surprise of 4.75%, on average, in the trailing four quarters, beating estimates on all occasions. Honeywell’s second-quarter 2021 adjusted earnings of $2.02 per share surpassed the Zacks Consensus Estimate of $1.94 by 4.12%.
In the past three months, shares of the company have lost 4.3% compared with the industry’s decline of 0.9%.
Key Factors
Weakness in Honeywell’s commercial original equipment business on account of challenged original equipment build rates is likely to have adversely impacted its Aerospace segment’s performance in the third quarter. Headwinds across the commercial aftermarket business, owing to the low international air transport flight hours, are also expected to have hurt the segment’s top line. Also, weakness across its defense and space business owing to the moderating U.S. defense spend and lower international defense volumes might have hurt its performance. However, strong recovery in aftermarket businesses in business aviation and air transport sectors might have supported its top-line numbers. The Zacks Consensus Estimate for the Aerospace segment’s revenues for the third quarter is currently pegged at $2,871 million, indicating growth of 3.8% from the quarter-ago number and 7.9% from the year-ago reported figure.
The company’s Performance Materials and Technologies segment is likely to have benefited from strong advanced materials sales and recovery in short-cycle process solutions and UOP businesses. However, challenged global mega projects might have affected the segment’s revenues. The consensus estimate for Performance Materials and Technology’s revenues is pegged at $2,543 million, suggesting a decrease of 0.4% from the previous quarter’s reported figure and 12.9% increase on a year-over-year basis.
Solid demand for security and electrical products, as well as building management systems is likely to have augmented its Building Technologies segment in the to-be-reported quarter. However, challenges related to the supply chain might have dragged its performance. The consensus estimate for the segment’s revenues stands at $1,419 million, implying an increase of 0.9% sequentially and 8.7% year over year.
Honeywell’s Safety and Productivity Solutions segment is anticipated to have gained from a solid backlog in the personal protective equipment business, along with strong demand for warehouse and workflow solutions and productivity solutions and services. However, supply chain constraints are likely to have played a spoilsport. The consensus mark for the segment’s revenues stands at $1,913 million, implying an 8.2% sequential decrease but growth of 21.2% on a year-over-year basis.
Escalating cost of sales and operating expenses have been a concern for the company. In the second quarter, its cost of sales rose 13.8% year over year while selling, general and administrative expenses increased 2%. High costs might have adversely impacted its margin and profitability in the third quarter as well. Also, it is expected to have incurred repositioning charges of $50-$100 million in the third quarter for executing restructuring programs. This is likely to have adversely impacted its earnings in the to-be-reported quarter.
The consensus estimate for the company’s third-quarter total revenues is currently pegged at $8,723 million, suggesting a decrease of 1% sequentially and an 11.9% increase year over year. The consensus estimate for earnings of $2.01 suggests a decline of 0.5% sequentially and a 28.8% increase from the year-ago reported number.
Honeywell International Inc. Price and EPS Surprise
Honeywell International Inc. price-eps-surprise | Honeywell International Inc. Quote
Earnings Whispers
According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
But that is not the case here as we will see below.
Earnings ESP: Honeywell has an Earnings ESP of -0.54%, as the Most Accurate Estimate is pegged at $2.00, lower than the Zacks Consensus Estimate of $2.01.
Zacks Rank: The company carries a Zacks Rank #4 (Sell).
Key Picks
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Deere & Company (DE - Free Report) has an Earnings ESP of +5.55% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carlisle Companies Incorporated (CSL - Free Report) has an Earnings ESP of +0.18% and a Zacks Rank #3.
Federal Signal Corporation (FSS - Free Report) has an Earnings ESP of +1.09% and a Zacks Rank #3.