Honeywell (HON) to Post Q1 Earnings: What's in the Offing?
Honeywell International Inc. HON is scheduled to report first-quarter 2022 results on Apr 29, before the opening bell.
The company delivered an earnings surprise of 2.94%, on average, in the trailing four quarters, beating estimates on all occasions. Honeywell’s fourth-quarter 2021 adjusted earnings of $2.09 per share surpassed the Zacks Consensus Estimate of $2.08 by 0.48%.
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In the past three months, shares of the company have lost 6.5% compared with the industry’s decline of 4.3%.
Key Factors
Strength across Honeywell’s commercial aviation aftermarket business, supported by stable demand in the air transport and business aviation markets, is likely to have supplemented the top-line performance of its Aerospace segment in the first quarter. Also, strength in the company’s commercial aviation original equipment business backed by improvement in build rates is likely to have boosted its performance.
The Performance Materials and Technologies segment might have gained from strong advanced materials sales and strength in its UOP business. However, weakness in its process solutions business owing to slow recovery in projects and lower smart energy demand is expected to have hurt the segment’s top line.
Its Safety and Productivity Solutions segment is anticipated to have performed well in the quarter on strength in its advanced sensing technologies business and solid demand for productivity solutions and services. However, weakness in its personal protective equipment business owing to the low demand environment for products is likely to have played spoilsport. Solid demand for building products and management systems is likely to have supported the Building Technologies segment in the to-be-reported quarter.
Honeywell is anticipated to have benefited from its efforts to maximize productivity as well as commercial and operational excellence in the first quarter. The company’s repositioning actions are likely to have aided it in maintaining a solid margin performance.
However, the company has been dealing with rising costs and operating expenses over time. In 2021, its cost of sales increased 5.5% year over year while selling, general and administrative expenses rose 0.5%. High costs might have adversely impacted its margin and profitability in the first quarter as well. Also, it is expected to have incurred repositioning charges in the first quarter for executing restructuring programs. This is likely to have adversely impacted its earnings in the quarter.
The consensus estimate for the company’s first-quarter total revenues is currently pegged at $8,350 million, suggesting a decrease of 3.5% from the quarter-ago reported number and a 1.2% fall year over year. The consensus estimate for earnings of $1.86 indicates a decline of 11% and 3.1% on a sequential and year-over-year basis, respectively.
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 -1.48%, as the Most Accurate Estimate is pegged at $1.83, lower than the Zacks Consensus Estimate of $1.86.
Honeywell International Inc. Price and EPS Surprise
Honeywell International Inc. price-eps-surprise | Honeywell International Inc. Quote
Zacks Rank: The company carries a Zacks Rank #3.
Key Picks
Here are some companies that you may want to consider as, according to our model, these have the right combination of elements to beat on earnings this reporting cycle.
Chart Industries, Inc. GTLS has an Earnings ESP of +9.16% and a Zacks Rank of 3 at present. GTLS delivered a trailing four-quarter earnings surprise of 2.9%, on average.
Earnings estimates of Chart Industries have decreased 2.3% for 2022 in the past 60 days. Its shares have gained 37.8% in the past three months.
Eaton Corporation plc ETN has an Earnings ESP of +0.85% and a Zacks Rank of 3, currently. ETN delivered a trailing four-quarter earnings surprise of 7%, on average.
Earnings estimates of Eaton have decreased 0.7% for 2022 in the past 60 days. Its shares have declined 7.5% in the past three months.
AGCO Corporation AGCO has an Earnings ESP of +0.93% and a Zacks Rank of 3, currently. Its earnings surprise in the last four quarters was 56.7%, on average.
In the past 60 days, AGCO’s earnings estimates have decreased 0.7% for 2022. The stock has rallied 8.2% in the past three months.
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Honeywell International Inc. (HON) : Free Stock Analysis Report
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