Post Earnings Coverage as Honeywell Q3 Results Outperformed Consensus

LONDON, UK / ACCESSWIRE / October 31, 2016 / Active Wall St. announces its post-earnings coverage on Honeywell International Inc. Earnings (NYSE: HON). The company posted its financial results for the third quarter fiscal 2016 (Q3 FY16) on October 21, 2016. The Morris Plains, New Jersey-based company’s quarterly revenues inched up 2% y-o-y, beating market consensus estimates. Register with us now for your free membership at: http://www.activewallst.com/register/.

Today, AWS is promoting its earnings coverage on HON. Get our free coverage by signing up to http://www.activewallst.com/registration-3/?symbol=HON.

Earnings Reviewed

In Q3 FY16, Honeywell reported revenues of $9.80 billion, up from $9.61 billion recorded at the end of Q3 FY15. Total revenues numbers for the reported quarter outperformed market expectations of $9.77 billion. However, core organic sales were down 3% y-o-y. During the quarter, sales growth was led by process solutions, transportation systems and home and building technologies, partially offset by softness in business jets, defense and space, productivity solutions and UOP.

During the reported period, product sales grew to $7.74 billion from $7.57 billion recorded in the year ago period. Honeywell’s services sales improved marginally during the quarter to $2.06 billion from $2.04 billion in Q3 FY15.

The industrial conglomerate reported Q3 FY16 net income of $1.24 billion, or $1.60 per diluted share, compared to $1.26 billion, or $1.60 per diluted share, in Q3 FY15. The company’s adjusted earnings per share (EPS) of $1.67 (including 7 cents per share deployed in restructuring) beat market earnings estimates of $1.60 per diluted share.

Operating Metrics

For the three months ended on October 01, 2016, the company posted segment’s profit margin of $1.72 billion, or 17.5% on revenue, compared to $1.85 billion, or 19.3% of revenue, in the prior year’s quarter. The company’s operating income margin for Q3 FY16 came in at $1.53 billion, or 15.6% of revenues, versus $1.76 billion, or 18.3% of revenues, in Q3 FY15. The company attributed this decline in margins to the impact of OEM incentives, M&A integration costs, and the lower volumes partially offset by benefits from previously funded restructuring.

Segment Performance

During Q3 FY16, the company’s Aerospace segment’s revenue came in at $3.60 billion compared to $3.82 billion in the year ago period. The segment reported Q3 FY16 profit of $663 million compared to $833 billion in Q3 FY15. The Aerospace segment’s margins were down by 340 basis points to 18.5%, reflecting an increase in OEM incentives and lower volumes.

Honeywell’s Home and Building Technologies segment’s revenues were $2.70 billion in Q3 FY16, which were more than the last year’s recorded revenues of $2.31 billion. The segment’s reported operating profit was $441 million versus $408 billion in Q3 FY15. Performance Materials and Technologies segment reported revenues of $2.33 billion in Q3 FY16, up from $2.28 billion. The improvement was due to strong catalyst shipments and conversion of worldwide giant projects in Process Solutions. The segment had profit of $503 million compared to $474 million in the last year’s quarter.

The company’s Safety and Productivity Solutions segment revenues for Q3 FY16 were down 2% y-o-y to $1.17 billion. The segment’s sales fell as there were lower volumes of Safety and Productivity Solutions’ trade. The segment’s profit also fell to $172 million in Q3 FY16 from $193 million in the year ago quarter.

Cash Flow & Balance Sheet

For the three months ended on September 30, 2016, Honeywell generated $1.69 billion in cash from operations compared to $1.55 billion in the year ago quarter. The company free cash flow declined 10% y-o-y to $1.42 billion. The company had cash and cash equivalents balance of $6.43 billion compared to $5.46 billion at the close of books on December 31, 2015. Furthermore, the company ended the quarter with total debt of $9.61 billion compared to $5.55 billion as on December 31, 2015.

Dividend

On October 28, 2016, Honeywell’s Board of Directors approved a 12% increase in the company’s regular annual cash dividend rate. The company’s shareholders will now receive a quarterly cash dividend of $0.665 per common share, payable on December 09, 2016, to shareowners of record at the close of business on November 18, 2016.

Outlook

For full FY16, Honeywell expects revenues in the range of $39.4 billion to $39.6 billion, up 2%-3% y-o-y. Furthermore, the company anticipates core sales to decline in the range of 1%-2% y-o-y. The company’s management forecasts earnings to be in the range of $6.60–$6.64 per share for FY16, up 8%–9% y-o-y. Furthermore, the company’s segment’s margin and operating profit margin are expected to be in the range of 18.1% and 17.6%, respectively, for the year ended December 31, 2016.

Stock Performance

On Friday, October 28, 2016, Honeywell International’s shares were marginally down 0.92%, finishing the day at $109.83 with volume of 2.88 million shares exchanging hands by the close of the trading session. For the last twelve months, the stock has gained 9.04%. Furthermore, on a year to date basis, the stock advanced 7.75%. Shares of the company have a PE ratio of 17.16 and have a dividend yield of 2.17%.

Active Wall Street:

Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

AWS has not been compensated; directly or indirectly; for producing or publishing this document.

PRESS RELEASE PROCEDURES:

The non-sponsored content contained herein has been prepared by a writer (the “Author”) and is fact checked and reviewed by a third party research service company (the “Reviewer”) represented by a credentialed financial analyst, for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the “Sponsor”), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.

NO WARRANTY

AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.

NOT AN OFFERING

This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/.

CONTACT

For any questions, inquiries, or comments reach out to us directly. If you’re a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: info@activewallst.com

Phone number: 1-858-257-3144

Office Address: 3rd floor, 207 Regent Street, London, W1B 3HH, United Kingdom

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Active Wall Street

ReleaseID: 447963