Honeywell’s 4Q Profit Tops Estimates

Honeywell International reported better-than-expected fourth-quarter results. Despite the 4Q beat, its shares closed 3.7% lower on Friday.

Honeywell’s (HON) 4Q earnings of $2.07 per share remained flat year-over-year but topped the company’s guidance range of $1.97-$2.02 per share as well as analysts’ expectations of $2.00. Its revenues of $8.9 billion declined 6% year-over-year but came in above the Street’s forecasts of $8.4 billion.

Organic revenues decreased by 7% during the quarter, reflecting weakness across most of its business segments. However, organic sales for its Safety and Productivity Solutions segment jumped 27% in 4Q.

The company’s CEO Darius Adamczyk said, “Honeywell’s strong balance sheet put us in a good position to weather the challenges of 2020 while investing for future growth. We invested in high-return capital expenditures, repurchased $3.7 billion of Honeywell shares, completed three acquisitions, made six new investments within Honeywell Ventures, and announced our 11th consecutive dividend increase.”

As for 2021, the company expects to generate revenues of $33.4 billion to $34.4 billion versus analysts’ expectations of $33.95 billion. It projects an organic revenue growth range of about 1% to 4% for 2021.

Furthermore, Honeywell forecasts adjusted earnings to be in the range of $7.60 to $8.00 per share, representing year-over-year growth of 7% to 13%. Analysts were looking for earnings of $7.87 per share. (See Honeywell stock analysis on TipRanks)

On Jan. 29, Cowen & Co. analyst Gautam Khanna maintained a Buy rating and a price target of $225 (15.2% upside potential) on the stock. In a note to investors, the analyst said, “Q4 adj EPS beat due to stronger sales in all segments, and margin impressed at Aero where aero aftermarket rose 26% vs. Q3.”

Overall, the Street has a cautiously optimistic outlook, with a Moderate Buy consensus rating based on 9 Buys and 8 Holds. The average analyst price target of $210.19 implies upside potential of about 7.6% to current levels. Shares gained 13.9% in the past year.

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