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Honeywell (HON) Q4 Earnings & Revenues Surpass Estimates

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Zacks Equity Research
·3 min read
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Honeywell International Inc. HON has reported better-than-expected fourth-quarter 2020 results, wherein both earnings and revenues surpassed estimates.

Earnings & Revenues

Adjusted earnings were $2.07 per share, surpassing the Zacks Consensus Estimate of $2.00. Moreover, the bottom line was up 0.5% year over year.

In 2020, the company’s adjusted earnings came in at $7.10, down 13% year over year.

Honeywell’s fourth-quarter revenues were $8,900 million, surpassing the consensus estimate of $8,358 million. The top line fell 6% year over year on a reported basis and 7% on an organic basis, owing to weakness in end markets due to the coronavirus outbreak-led issues.

In 2020, the company’s revenues were $32,637 million, down 11% on a year-over-year basis.

Segmental Breakup

Aerospace’s quarterly revenues were $2,978 million, down 19% year over year. Honeywell Building Technologies’ revenues declined 3% to $1,426 million. Performance Materials and Technologies’ revenues totaled $2,556 million, down 11%, while that for Safety and Productivity Solutions increased 28% to $1,940 million.

Honeywell International Inc. Price, Consensus and EPS Surprise

Honeywell International Inc. Price, Consensus and EPS Surprise
Honeywell International Inc. Price, Consensus and EPS Surprise

Honeywell International Inc. price-consensus-eps-surprise-chart | Honeywell International Inc. Quote

Costs/Margins

The company’s total cost of sales in the reported quarter was $5,976 million, down 5.6% year over year. Selling, general and administrative expenses declined 15.3% to $1,248 million. Interest expenses and other financial charges were $95 million compared with $91 million a year ago.

Operating income margin in the fourth quarter was 18.8%, up 100 basis points year over year.

Balance Sheet/Cash Flow

Exiting 2020, Honeywell had cash and cash equivalents of $14,275 million compared with $9,067 million as of Dec 31, 2019. Long-term debt was $16,342 million, higher than $11,110 million recorded at the end of 2019.

In 2020, the company generated $6,208 million in cash from operating activities compared with $6,897 million a year ago. Capital expenditure was $906 million compared with $839 million incurred in 2019.

Adjusted free cash flow in the quarter was $2,491 million, up 8.7% year over year.

Outlook

Honeywell provided guidance for full-year 2021. For the year, the company anticipates earnings to be in the range of $7.60 to $8.00 per share, suggesting 9.9% year-over-year improvement at the mid-point. It anticipates revenues to be between $33.4 billion and $34.4 billion, with organic revenues expected to be up 1-4%.

For 2021, it also expects operating cash flow in the range of $5.7 billion to $6.1 billion, and free cash flow to be between $5.1 billion and $5.5 billion.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks are AGCO Corporation AGCO, AptarGroup, Inc. ATR and Danaher Corporation DHR. While AGCO currently sports a Zacks Rank #1 (Strong Buy), AptarGroup and Danaher carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO delivered a positive earnings surprise of 434.48%, on average, in the trailing four quarters.

AptarGroup delivered a positive earnings surprise of 10.91%, on average, in the trailing four quarters.

Danaher delivered a positive earnings surprise of 19.86%, on average, in the trailing four quarters.

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