How Did Honeywell Perform In Q1?

by Trefis Team
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Honeywell International (NYSE: HON) posted rather stellar results this time around. The conglomerate easily surpassed both the sales and earnings estimates expected by analysts in the quarter. In general, the top line improved greatly on a strong performance at aerospace. This improved performance consequently gave the company enough confidence to raise its earnings guidance for a second time this year. The industrial giant now expects 2018 profit of $7.85 to $8.05 per share, compared with previous forecast of $7.75-$8.00, while revenues come in around $42.7 billion-$43.5 billion, from the previously forecast $41.8 billion-$42.5 billion.

Accordingly, we have revised our previous price estimate to $155. Given that the market is currently trading the stock around $150, we see a potential upside going forward. In this respect, we have created an interactive dashboard to help make sense of our valuation techniques and our reasoning. Click on the link to modify the drivers and arrive at your own price.

  • The star of the quarter, as mentioned above, was the aerospace segment. After many tough quarters at the segment, things seem to finally be turning around. On an organic basis, revenues at aerospace grew by almost 8%. In general, it benefited from continuing strong demand for commercial jet components; the steady increase in global air traffic has enabled both Boeing and Airbus to capitalize on their healthy backlogs. Further, management also mentioned that there are signs of recovery in demand for business jets as well.
  • Two other gainers in the quarter were Honeywell’s Performance Materials and Technologies, and Safety and Productivity Solutions businesses. Both segments managed to post high single digit growth in the quarter. We expect this momentum to carry through most of 2018.
  • Additionally, Honeywell also seems to be benefiting from increasing demand from oil and gas customers as oil prices continue to improve. We can expect to see this demand increase further through the year. Further, the company’s supply chain and warehouse automation equipment and software business is receiving a heavy boost from the general increase in e-commerce orders, the world over.
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