Honeywell’s
fourth-quarter earnings showed that companies can still generate growth in a difficult economy.
Honeywell
on Thursday reported fourth-quarter earnings per share of $2.60 from sales of $9.4 billion. Wall Street was looking for earnings of $2.59 a share on sales of $9.6 billion, according to FactSet. A year ago, Honeywell reported profit of $2.52 a share and sales of $9.2 billion.
“Honeywell once again demonstrated its resilience by delivering on our commitments and finishing strong in another economically challenging year,” said CEO Vimal Kapur in a news release.
Full-year sales grew 4% on a comparable basis. Operating profit grew 10%. Margins expanded to 22.7% from 21.7%. Operating profit in Honeywell’s aerospace business was $3.7 billion, up 16%. Building technologies operating profit hit $1.5 billion, up 5%. Operating profit in Honeywell’s energy-related business was $2.5 billion, up 8%. Honeywell’s weakest business segment was automation—operating profit fell 17% year over yea to $900 million.
Looking ahead, Honeywell expects to generate 2024 earnings of between $9.80 and $10.10 a share. The midpoint of guidance, at $9.95, is essentially in line with the $9.96 a share that Wall Street is projecting.
Sales are expected to grow between 4% and 6%, a little faster than in 2023. Profit margins are expected to expand again, coming in at around 23%.
The results and guidance overall were solid. What’s more, Honeywell tends to guide conservatively. In February 2023, Honeywell told investors to expect EPS of about $9.55. By October, guidance had crept up to $9.70. Honeywell ended up reporting $9.71 for the full year, excluding pension headwinds.
Investors might have wanted a little more. Shares were down 2.4% in premarket trading while
S&P 500
and
Nasdaq Composite
futures were up about 0.4% and 0.6%, respectively.
The initial move for the stock isn’t out of line with other quarterly reactions. Coming into the report, Honeywell had beaten quarterly results each of the past four quarters. The average stock price move, up or down after earnings, has averaged about 2.5%. Shares have risen twice and fallen twice over that span.
Options markets imply Honeywell stock will move about 2% or 3%, up or down, after earnings.
Management hosts a conference call at 8:30 a.m. Eastern time to discuss results. Analysts and investors will want to hear more details about the economy and how business is shaping up in the new year.
Coming into Thursday trading, Honeywell stock has declined about 2% over the past 12 months. The S&P 500 and Nasdaq have risen about 18% and 28%, respectively.
Write to Al Root at [email protected]
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