Honeywell (HON) Gears Up to Post Q4 Earnings: What to Expect?
Honeywell International Inc. HON is likely to witness top-and-bottom-line growth when it reports fourth-quarter 2023 results on Feb 1 before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $9,703 million, which suggests growth of 5.6% from the prior-year quarter’s reported figure.
The consensus mark for earnings is pinned at $2.60 per share, which has improved by a penny in the past 60 days. The figure indicates a jump of 3.2% from the figure reported in the prior-year quarter. The company’s bottom line surpassed the Zacks Consensus Estimate by 2.3% in the last reported quarter. It has a trailing four-quarter earnings surprise of 3%, on average.
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In the past three months, HON’s shares have gained 12.3% compared with the industry’s growth of 11.5%.
Let’s see how things have shaped up for Honeywell this earnings season.
Key Factors and Estimates for Q4
Strength across Honeywell’s commercial aviation aftermarket business, supported by stable demand in the air transport market, is likely to have supplemented the top-line performance of its Aerospace segment in the fourth quarter. Also, strength in the company’s commercial aviation original equipment business, backed by solid orders, is likely to have boosted its performance. Solid momentum in the defense and space business is also expected to have been a tailwind for the segment.
For the fourth quarter, we expect the company’s Aerospace segment revenues to increase 18.2% year over year to $3,785.5 million. Our estimate for the segment’s operating profit hints at a year-over-year increase of 17.3%.
The Performance Materials and Technologies (“PMT”) segment is expected to generate a year-over-year increase in revenues, driven by strength in process solutions and UOP operations. The segment’s operations are likely to have performed strongly, driven by solid gas processing and petrochemical catalyst shipments, along with robust demand in the sustainable technology solutions business. However, lower volumes in the advanced materials business due to softness in electronics, chemicals and life science businesses might have been a spoilsport.
Our estimate for PMT revenues in the fourth quarter is pegged at $3,087.4 million, indicating 7.9% growth from the year-ago reported number. We expect the segment’s operating profit to increase 10.4% on a year-over-year basis.
Solid orders for building projects, particularly in the energy space, are likely to have supported the Building Technologies segment in the to-be-reported quarter. Our estimate for Building Technologies revenues is pegged at $1,544.3 million, indicating a 2% improvement from the year-ago reported number. We expect the segment’s operating profit to increase 4.7% on a year-over-year basis.
However, Honeywell’s Safety and Productivity Solutions segment is expected to put up a weak show in the to-be-reported quarter due to lower warehouse, workflow and productivity solutions volumes owing to weakness in the warehouse automation market. We expect the segment’s revenues to decline 21.1% on a year-over-year basis. Our estimate for the segment’s operating profit suggests a 32.1% decline from the year-ago reported figure.
Given HON’s extensive presence in international markets, foreign currency headwinds might have affected its top line in the soon-to-be-reported quarter. Also, the company’s bottom line is expected to reflect the impact of raw material cost inflation.
Honeywell International Inc. Price and EPS Surprise
Honeywell International Inc. price-eps-surprise | Honeywell International Inc. Quote
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Honeywell this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as elaborated below.
Earnings ESP: Honeywell has an Earnings ESP of -1.05%, as the Most Accurate Estimate is pegged at $2.57, lower than the Zacks Consensus Estimate of $2.60. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #3.
Stocks With the Favorable Combination
Here are three companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming release:
Griffon Corporation GFF has an Earnings ESP of +2.08% and sports a Zacks Rank #1. The company is slated to release fourth-quarter results on Jan 30. You can see the complete list of today’s Zacks #1 Rank stocks here.
GFF delivered a trailing four-quarter earnings surprise of 28.6%, on average. The stock has rallied 50.8% in the past three months.
Danaher Corporation DHR has an Earnings ESP of +3.46% and a Zacks Rank #3. The company is slated to release fourth-quarter results on Jan 30.
Danaher delivered a trailing four-quarter earnings surprise of 8.5%, on average. The stock has rallied 25.9% in the past three months.
Xylem Inc. XYL has an Earnings ESP of +1.40% and a Zacks Rank #3. The company is slated to release fourth-quarter results on Feb 6.
Xylem delivered a trailing four-quarter earnings surprise of 14.4%, on average. The stock has rallied 25.9% in the past three months.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Honeywell International Inc. (HON) : Free Stock Analysis Report
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