Honeywell International Earnings: What to Expect

Honeywell stock has climbed to all-time record highs lately, with its diverse set of businesses all performing relatively well. How much higher can Honeywell earnings fly?

Jan 23, 2014 at 10:31AM

Honeywell (NYSE:HON) will release its quarterly report on Friday, and investors have been happy to see the stock rise to record levels recently. With strength in its aerospace business, many believe that Honeywell earnings can follow the same upward trajectory that has lifted Boeing (NYSE:BA) and United Technologies (NYSE:UTX) over the past year. Yet Honeywell's other business lines give it more overlap with General Electric (NYSE:GE), and both companies have a chance to cash in on hot areas like smart-energy-use applications.

Honeywell is best known for its aircraft components and systems business, which the company has used for both commercial and military applications. But diverse divisions covering temperature management and control systems for residential and commercial properties, as well as security systems and other automated solutions, add more breadth to Honeywell's overall scope. Let's take an early look at what's been happening with Honeywell over the past quarter and what we're likely to see in its report.


Stats on Honeywell

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$10.19 billion

Change From Year-Ago Revenue


Earnings Beats in Past Four Quarters


Source: Yahoo! Finance.

How fast can Honeywell earnings grow?
In recent months, analysts have become slightly less enthusiastic about Honeywell earnings, cutting a penny per share from their fourth-quarter and full-year 2014 estimates. That hasn't held the stock back, though, with gains of nearly 6% since mid-October.

Honeywell's third-quarter earnings didn't create the positive momentum that the company has experienced in past quarters. The company only managed to match earnings expectations, and revenue growth of about 3% wasn't as strong as the 6% gains that investors anticipated. Moreover, slight downward revisions to full-fiscal-year sales guidance overshadowed Honeywell's increase in the bottom end of its earnings-per-share call for the year, sending the stock lower after the announcement.

Honeywell's aerospace division has been a key driver of growth recently, with Boeing's success helping it and other suppliers such as United Technologies and General Electric. For instance, just last week, Boeing said that its KC-46A military tanker aircraft is on schedule, with Honeywell supplying the auxiliary power unit and cabin-pressure control system for the plane. Honeywell has also obtained a number of lucrative defense contracts of its own, including recent awards to provide guidance systems for ballistic missiles and spare parts for weapons systems including aircraft, engines, and helicopters.

But Honeywell's other businesses have tapped into the move toward energy efficiency and other environmentally friendly practices, an area where it also goes up against General Electric. Honeywell's programmable thermostats have been around for a long time, but new technology incorporating mobile apps for remote control purposes has revolutionized their use. Moreover, Honeywell last month announced plans to ramp up production of a new refrigerant for auto air-conditioning systems with about a thousandth of the global-warming impact of the current HFC-134a standard. All told, Honeywell's automation and control-solutions business still brings in more revenue than any other segment, even though its aerospace division had greater operating profits in 2012.

Another area in which Honeywell hasn't gotten enough credit is in the auto industry, where its turbocharging systems have seen increased demand lately. Competitor Cummins (NYSE:CMI) has also managed to tap into rising popularity of this technology, but Honeywell has the inside track to an anticipated 40% of all vehicles having turbo systems installed by 2018.

In the Honeywell earnings report, watch to see whether the company's aerospace growth continues. Even if the segment does well, it's important for Honeywell to continue delivering strong performance from all of its businesses in order to keep its overall competitive edge.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Cummins. The Motley Fool owns shares of Cummins and General Electric. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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