Honeywell (HON) Tops Q2 Earrings on Operational Excellence
Honeywell International Inc. HON reported better-than-expected results for second-quarter 2018.
Earnings & Revenues
Adjusted earnings in the reported quarter came in at $2.12 per share, outpacing the Zacks Consensus Estimate of $2.01. The bottom line also improved 18% year over year. This upside primarily stemmed from the company’s stellar operational performance during the quarter.
Revenues of $10,919 million in the second quarter surpassed the Zacks Consensus Estimate of $10,776 million. The top line also grew 8% year over year. Organic revenues improved 6% on an annualized basis.
Segmental Break-Up
Revenues in the Aerospace segment came in at $4,058 million, up 10% year over year. The top-line performance of the Home and Building Technologies segment improved 5%, year over year, to $2,546 million. The Performance Materials and Technologies segment’s revenues in the second quarter came in at $2,698 million, up 5% year over year. The Safety and Productivity Solutions revenues improved 13%, year over year, to $1,617 million.
Honeywell International Inc. Price, Consensus and EPS Surprise
Honeywell International Inc. Price, Consensus and EPS Surprise | Honeywell International Inc. Quote
Costs/Margins
The company’s total cost of sales in the reported quarter was $7,613 million, up 8.4% year over year. Selling, general and administrative expenses came in at $1,528 million, up 4.9% year over year. Interest expenses and other financial charges were $95 million compared with $79 million witnessed in the comparable period last year.
Operating margin in the second quarter was 16.3%, up 40 basis points year over year.
Balance Sheet/Cash Flow
Exiting the quarter, Honeywell had cash and cash equivalents of $8,082 million, higher than $7,059 million recorded as of Dec 31, 2017. Long-term debt was $12,504 million, slightly lower than $12,573 million recorded at the end of 2017.
During the reported quarter, the company generated $1,861 million cash from operating activities, higher than $1,447 million recorded in the year-ago period. Capital expenditure in the April-June quarter was $199 million, lower than $233 million incurred in the year-earlier quarter.
Outlook
Concurrent with its earnings release, Honeywell revised the full-year earnings guidance for 2018. This Zacks Rank #2 (Buy) company anticipates to report earnings of $8.05-$8.15 per share in the current year, higher than the previous projection of $7.85-$8.05 per share.
The company is poised to grow on the back of strategic investments, greater operational efficacy and stronger demand for its diversified products.
Other Key Picks
Some other top-ranked stocks in the same space are listed below:
Hitachi Ltd. HTHIY sports a Zacks Rank of 1 (Strong Buy). The company’s earnings per share (EPS) are predicted to grow 13% in the next three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
Raven Industries, Inc. RAVN also flaunts a Zacks Rank of 1. The company’s EPS will likely be up 10%, over the next three to five years.
Sumitomo Corp. SSUMY is another Zacks #1 Ranked company. Its EPS is projected to rise 5.50% during the same time frame.
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