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Honeywell International Inc.’s (HON - Free Report) third-quarter 2022 adjusted earnings (excluding 3 cents from non-recurring items) of $2.25 per share surpassed the Zacks Consensus Estimate of $2.16. The bottom line improved 11.4% year over year.
Total revenues of $8,951 million missed the Zacks Consensus Estimate of $9,075.3 million. The top line increased 5.6% from the year-ago quarter. Organic sales increased 9% due to growth in Honeywell Building Technologies, Performance Materials and Technologies and Aerospace segments.
Segmental Details
Aerospace’s quarterly revenues were $2,976 million, up 9% year over year. Strong commercial aftermarket demand drove the segment’s performance. Honeywell Building Technologies’ revenues increased 11% to $1,526 million owing to growth in building solutions. Performance Materials and Technologies’ revenues totaled $2,720 million, up 8%.
Honeywell International Inc. Price, Consensus and EPS Surprise
Segmental revenues were driven by higher volumes and pricing in the advanced materials business. Safety and Productivity Solutions revenues decreased 7% to $1,727 million due to lower volumes in warehouse and workflow solutions and personal protective equipment.
Costs/Margins
The company’s total cost of sales in the reported quarter was $5,981 million, up 4.1% year over year. Selling, general and administrative expenses were $1,228 million, up 6.6%. Interest expenses and other financial charges were $98 million compared with $90 million a year ago.
Operating income in the third quarter was $1,742 million, up 10.6% year over year. The operating income margin was 19.5% compared with 18.6% in the year-ago period.
Balance Sheet/Cash Flow
Exiting the third quarter, Honeywell had cash and cash equivalents of $7,449 million compared with $10,959 million at the end of December 2021. Long-term debt was $12,236 million, lower than $14,254 million recorded at the end of 2021.
In the first nine months of 2022, HON generated $2,908 million in cash from operating activities compared with $3,375 million at the end of the year-ago period. Capital expenditures totaled $525 million in the first nine months of 2022 compared with $614 million incurred in the year-ago period.
Free cash flow in the reported quarter was $1,899 million, up more than 100% year over year.
Outlook Improved
Following the strong third-quarter performance, Honeywell improved its guidance for the full year. The company now expects adjusted earnings per share in the band of $8.70-$8.80 for 2022 compared with $8.55-8.80 expected earlier. This indicates year-over-year growth of 8-9%. The Zacks Consensus Estimate for 2022 earnings stands at $8.68.
Honeywell expects a segment margin of 21.6-21.8% for 2022 compared with 21.3-21.7% anticipated earlier. The company continues to expect a free cash flow of $4.70-$5.10 billion for 2022. Operating cash flow is now expected to be $5.20-$5.60 billion for 2022 compared with $5.50-$5.90 billion estimated earlier.
Honeywell expects sales of $35.40-$35.70 billion for 2022 compared with $35.50-$36.10 billion anticipated earlier. The Zacks Consensus Estimate for the same stands at $35.77. Organic sales growth is expected to be 6-7% now compared with 5-7% anticipated earlier.
Zacks Rank & Key Picks
Honeywell currently carries a Zacks Rank #3 (Hold).
Enerpac Tool has an estimated earnings growth rate of 44.6% for the current fiscal year. The company’s shares have gained 25.5% in the past six months.
iRobot Corporation (IRBT - Free Report) presently has a Zacks Rank of 2 (Buy). IRBT’s earnings surprise in the last four quarters was 59.1%, on average.
iRobot has an estimated earnings growth rate of 36.6% for the current year. The stock has rallied 11.4% in the past six months.
Titan International, Inc. presently carries a Zacks Rank of 2. Its earnings surprise in the last four quarters was 47%, on average.
Titan International has an estimated earnings growth rate of 157.7% for the current year. The stock has jumped 2.6% in the past six months.
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Honeywell's (HON) Q3 Earnings Beat, 2022 EPS View Upbeat
Honeywell International Inc.’s (HON - Free Report) third-quarter 2022 adjusted earnings (excluding 3 cents from non-recurring items) of $2.25 per share surpassed the Zacks Consensus Estimate of $2.16. The bottom line improved 11.4% year over year.
Total revenues of $8,951 million missed the Zacks Consensus Estimate of $9,075.3 million. The top line increased 5.6% from the year-ago quarter. Organic sales increased 9% due to growth in Honeywell Building Technologies, Performance Materials and Technologies and Aerospace segments.
Segmental Details
Aerospace’s quarterly revenues were $2,976 million, up 9% year over year. Strong commercial aftermarket demand drove the segment’s performance. Honeywell Building Technologies’ revenues increased 11% to $1,526 million owing to growth in building solutions. Performance Materials and Technologies’ revenues totaled $2,720 million, up 8%.
Honeywell International Inc. Price, Consensus and EPS Surprise
Honeywell International Inc. price-consensus-eps-surprise-chart | Honeywell International Inc. Quote
Segmental revenues were driven by higher volumes and pricing in the advanced materials business. Safety and Productivity Solutions revenues decreased 7% to $1,727 million due to lower volumes in warehouse and workflow solutions and personal protective equipment.
Costs/Margins
The company’s total cost of sales in the reported quarter was $5,981 million, up 4.1% year over year. Selling, general and administrative expenses were $1,228 million, up 6.6%. Interest expenses and other financial charges were $98 million compared with $90 million a year ago.
Operating income in the third quarter was $1,742 million, up 10.6% year over year. The operating income margin was 19.5% compared with 18.6% in the year-ago period.
Balance Sheet/Cash Flow
Exiting the third quarter, Honeywell had cash and cash equivalents of $7,449 million compared with $10,959 million at the end of December 2021. Long-term debt was $12,236 million, lower than $14,254 million recorded at the end of 2021.
In the first nine months of 2022, HON generated $2,908 million in cash from operating activities compared with $3,375 million at the end of the year-ago period. Capital expenditures totaled $525 million in the first nine months of 2022 compared with $614 million incurred in the year-ago period.
Free cash flow in the reported quarter was $1,899 million, up more than 100% year over year.
Outlook Improved
Following the strong third-quarter performance, Honeywell improved its guidance for the full year. The company now expects adjusted earnings per share in the band of $8.70-$8.80 for 2022 compared with $8.55-8.80 expected earlier. This indicates year-over-year growth of 8-9%. The Zacks Consensus Estimate for 2022 earnings stands at $8.68.
Honeywell expects a segment margin of 21.6-21.8% for 2022 compared with 21.3-21.7% anticipated earlier. The company continues to expect a free cash flow of $4.70-$5.10 billion for 2022. Operating cash flow is now expected to be $5.20-$5.60 billion for 2022 compared with $5.50-$5.90 billion estimated earlier.
Honeywell expects sales of $35.40-$35.70 billion for 2022 compared with $35.50-$36.10 billion anticipated earlier. The Zacks Consensus Estimate for the same stands at $35.77. Organic sales growth is expected to be 6-7% now compared with 5-7% anticipated earlier.
Zacks Rank & Key Picks
Honeywell currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies are discussed below:
Enerpac Tool Group Corp. (EPAC - Free Report) presently sports a Zacks Rank #1 (Strong Buy). The company delivered a four-quarter earnings surprise of 3.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
Enerpac Tool has an estimated earnings growth rate of 44.6% for the current fiscal year. The company’s shares have gained 25.5% in the past six months.
iRobot Corporation (IRBT - Free Report) presently has a Zacks Rank of 2 (Buy). IRBT’s earnings surprise in the last four quarters was 59.1%, on average.
iRobot has an estimated earnings growth rate of 36.6% for the current year. The stock has rallied 11.4% in the past six months.
Titan International, Inc. presently carries a Zacks Rank of 2. Its earnings surprise in the last four quarters was 47%, on average.
Titan International has an estimated earnings growth rate of 157.7% for the current year. The stock has jumped 2.6% in the past six months.