Honeywell International Inc. HON has reported better-than-expected third-quarter 2020 results, wherein both earnings and revenues surpassed estimates.
Earnings & Revenues
Adjusted earnings were $1.56 per share, surpassing the Zacks Consensus Estimate of $1.49. However, the bottom line declined 25% year over year on account of lower sales.
Honeywell’s third-quarter revenues were $7,797 million, beating the consensus estimate of $7,656 million. The top line recorded a decline of 14% year over year, both on reported and organic basis on account of weakness in end markets due to the coronavirus outbreak-led issues.
Aerospace’s revenues were $2,662 million, down 24.9% year over year. Honeywell Building Technologies’ revenues declined 7.8% to $1,305 million. Performance Materials and Technologies’ revenues totaled $2,252 million, down 15.7%, while that for Safety and Productivity Solutions increased 8.3% to $1,578 million.
The company’s total cost of sales for the reported quarter was $5,383 million, down 10.8% year over year. Selling, general and administrative expenses declined 14.9% to $1,103 million. Interest expenses and other financial charges were $101 million compared with $96 million a year ago.
Operating income margin in the third quarter was 16.8%, down 250 basis points year over year.
Honeywell International Inc. Price, Consensus and EPS Surprise
Honeywell International Inc. price-consensus-eps-surprise-chart | Honeywell International Inc. Quote
Balance Sheet/Cash Flow
Exiting the third quarter, Honeywell had cash and cash equivalents of $14,036 million compared with $9,067 million as of Dec 31, 2019. Long-term debt was $17,687 million, higher than $11,110 million recorded at the end of 2019.
During the first nine months of 2020, the company generated $3,426 million in cash from operating activities compared with $4,283 million in the year-ago period. Capital expenditure was $615 million compared with $504 million incurred a year ago.
Adjusted free cash flow in the quarter was $758 million, down 41.1% year over year.
Honeywell provided guidance for fourth-quarter and full-year 2020. For fourth quarter of 2020, it anticipates adjusted earnings to be in the range of $1.97-$2.02 per share. It expects revenues to be between $8.2 billion and $8.5 billion, with organic revenues expected to be down 11-14% on a year-over-year basis.
For full-year 2020, the company anticipates adjusted earnings to be in the range of $7.00 to $7.05 per share. It anticipates revenues to be between $31.9 billion and $32.2 billion, with organic revenues expected to be down 12-13% on a year-over-year basis.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the same space are Crane Company CR, Danaher Corporation DHR and ITT Inc. ITT. All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Crane delivered trailing-four quarter positive earnings surprise of 14.59%, on average.
Danaher delivered a positive earnings surprise of 17%, on average, in the trailing four quarters.
ITT delivered a positive earnings surprise of 20.46%, on average, in the trailing four quarters.
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