Honeywell Earnings Preview: Aerospace and ACS Could Continue to Drive Sales This Quarter

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Honeywell

Honeywell (NYSE: HON) is all set to report earnings on Friday, July 22nd. The last few quarters have highlighted the management’s determination to bring the company back on track. Last quarter, the industrial giant managed to record positive sales and earnings figures in all its divisions except Performance Materials and Technologies. Last quarter’s momentum is expected to continue into this quarter as well.

Over the last eight quarters, Honeywell has managed to beat earnings estimates seven times while beating revenue estimates six times.

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Key Trends:

  • The Aerospace division continues to increase shipments and sales. Additionally, the segment’s repair and overhaul businesses have shown considerable growth due to increased demand. It is likely that Aerospace will continue to drive revenues this quarter as well.
  • Honeywell is the leading manufacturer of turbochargers in the world. The company expects that turbochargers will have a global adoption rate of about 47% by the end of 2020. As people start to realize the advanced applications of this technology, demand is set to increase at an unprecedented level. This is something that will help drive the top line for a long time to come.
  • Performance Materials and Technologies continues to lag in revenues primarily due to lower engineering and gas processing revenues at UOP and declining volumes at Process Solutions. Both these businesses are also plagued by widespread delays in customer projects. This slump could have a negative impact on revenues this time around as well – albeit in a small proportion.
  • Furthermore, the adverse effects of the strong dollar will continue to weigh on the revenues from international operations. However, solid performances in the Aerospace and ACS segments will likely help offset these small adversities and deliver strong overall figures in the quarter.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis of Honeywell

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