What To Expect From Honeywell Stock After It Reports Q1 Earnings?

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Honeywell

Honeywell (NYSE: HON) is scheduled to report its Q1 2022 results on Friday, April 29. We expect HON stock to trade higher post results announcement, with Q1 revenue and earnings likely being above the consensus estimates. The overall economic growth likely bolstered the revenue growth in Q1. However, inflationary pressure and ongoing supply chain issues may adversely impact the overall performance. That said, our forecast indicates that HON stock has more room for growth from its current levels, as discussed below. Our interactive dashboard analysis on Honeywell’s Earnings Preview has additional details.

(1) Revenues expected to be above the consensus estimates

  • Trefis estimates Honeywell’s Q1 2022 revenues to be around $8.4 billion, compared to the $8.3 billion consensus estimate.
  • While Honeywell’s aerospace business has been a drag on its revenue growth since the beginning of the pandemic, it has started to see some growth over the recent quarters.
  • This trend likely continued in Q1, with the economies opening up, resulting in a rise in flight hours, likely boding well for Honeywell’s airplanes aftermarket business.
  • Honeywell’s safety & productivity solutions business has been the key growth driver in 2021 due to higher demand for PPE. However, given the tough sales comparison to last year, the segment sales may face pressure in the near term.
  • That said, warehouse and workflow solutions and gas analysis businesses are expected to continue to see strong growth.
  • Looking back at Q4 2021, Honeywell reported a 3% y-o-y decline in sales to $8.7 billion due to supply chain issues and lower Covid-19 mask volume.
  • Our dashboard on Honeywell Revenues offers more details on the company’s top line and its comparison to peers.
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(2) EPS likely to be above the consensus estimates

  • Honeywell’s Q1 2022 adjusted earnings per share (EPS) is expected to be $1.90 per Trefis analysis, slightly ahead of the $1.86  consensus estimate.
  • Honeywell’s adjusted net income of $1.5 billion in Q4 2021 reflected a 1% y-o-y decline, primarily due to lower revenues.
  • As the company sees its sales rebound, the operating margins are expected to rise in 2022. Our dashboard on Honeywell’s Operating Income has more details.
  • For the full-year 2022, we expect the adjusted EPS to be higher at $8.70 than $8.06 in 2021.

(3) HON stock has more room for growth

  • We estimate Honeywell’s Valuation to be $222, which is 18% above the current market price of $189.
  • This represents a P/EBITDA multiple of 22x based on our Honeywell’s EBITDA forecast.
  • That said, if the company reports upbeat Q1 results and 2022 guidance better than the street estimates, the P/EBITDA multiple will likely be revised upward, resulting in higher levels for HON stock.

While HON stock looks like it has more room for growth, it is helpful to see how Honeywell’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Boston Scientific vs. Amphenol.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Apr 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 HON Return -3% -9% 70%
 S&P 500 Return -8% -12% 86%
 Trefis Multi-Strategy Portfolio -8% -15% 233%

[1] Month-to-date and year-to-date as of 4/27/2022
[2] Cumulative total returns since the end of 2016

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