Honeywell Earnings OK, Short on Revenues

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Honeywell International Inc. (NYSE: HON) reported fourth-quarter and full-year 2016 results before markets opened Friday. For the quarter, the conglomerate posted adjusted diluted earnings per share (EPS) of $1.74 on revenues of $9.99 billion. In the same period a year ago, the company reported EPS of $1.53 on revenues of $9.98 billion. Fourth-quarter results also compare to consensus estimates for EPS of $1.74 and $10.15 billion in revenues.

For the full year, Honeywell reported adjusted EPS of $6.46 and revenues of $39.3 billion, compared with 2015 EPS of $5.91 and revenues of $38.58 billion. Analysts were looking for EPS of $6.60 and revenues of $39.47 billion.

Honeywell has reached out to us and communicated that its adjusted EPS totals should not include the impact of earnings attributable to divestitures. On that basis, fourth quarter 2015 EPS was $1.58; 2016 EPS is $6.60 and 2015 EPS totaled $6.10.

On a GAAP basis, fourth-quarter EPS was down 12% at $1.34, which excludes $0.28 per share in mark-to-market pension expense and $0.12 per share in debt refinancing expense. Net income for the quarter totaled $1.05 billion, down from $1.2 billion in the same period last year.

The company affirmed 2017 guidance provided in December:

  • Earnings growth driven by organic sales growth (up 1% to 3%) along with strong margin expansion
  • Organic sales driven by capacity expansions and growth in connected products
  • Reported sales down 1% to up 2% due to impact of divestitures, net of acquisitions
  • Segment margin pp 70 to 110 basis points

Analysts have first-quarter estimates for $1.62 in EPS and revenues of $9.44 billion. For fiscal 2017, analysts have forecast EPS of $7.03 and revenues of $39.61 billion.

Honeywell’s board chair and chief executive, Dave Cote, said:

We delivered outstanding returns again in 2016 with a total shareowner return of 15%, which exceeded the S&P’s total shareowner return by 300 basis points. More importantly, we set the stage for a successful 2017.

The company returned nearly $4.5 billion to shareholders in dividends and buybacks in 2016.

Honeywell’s shares closed up about 0.8% at $117.97 on Thursday and were down about 1.7% in premarket trading Friday. The stock’s 52-week range of $99.42 to $120.02. The consensus 12-month price target was $129.55 before the report.