Industrial giant
Honeywell International
is slated to report third-quarter earnings Thursday morning. It will be a good chance for investors to hear about the global economy and how
Honeywell
is progressing toward its long-term goals.
After a relatively weak year for the stock, investors will be hoping for a post-earnings bounce.
For the third quarter, Wall Street is looking for earnings of $2.23 a share and sales of $9.2 billion. A year ago in the 2022 third quarter, Honeywell (ticker: HON) reported per-share earnings of $2.25 from sales of just under $9 billion.
Along with the current results, the company will likely update guidance. In July, Honeywell said full-year earnings should come in close to $9.15 a share, up about 4.5% compared with 2022. Full-year sales are expected to come in at about $37 billion, also up about 4.5%.
Honeywell’s long-term goal is to grow sales between 4% and 7% a year on average. This year will be below that, partly because the global industrial economy is relatively weak.
Management’s goal for segment operating profit margins is 25%. This year, Honeywell is expected to produce average profit margins about 22.5%.
The third quarter is also the first quarter of a new reporting structure for the company. Honeywell’s four operating segments are now Aerospace Technologies, Industrial Automation, Building Automation, as well as Energy and Sustainability Solutions.
The segments are similar to the its previous business units, but part of the energy business is being moved to Industrial Automation. The changes will make comparability a little harder for a couple quarters.
Through Wednesday’s close, Honeywell stock is down about 6% over the past 12 months. The
S&P 500
and
Dow Jones Industrial Average
are up about 9% and 4%, respectively.
It’s tough to blame all the underperformance on the company. Honeywell has beaten Street estimates in this year’s first and second quarters and raised guidance twice.
RBC analyst Deane Dray noted in a preview report that Honeywell’s shares have underperformed peers by a couple of percentage points over the past few weeks, and the stock is trading at the lower end of its historic valuation range.
That isn’t a bad setup for investors. Options markets imply the stock will move up or down roughly 3% after earnings. That is similar to recent reactions.
Management hosts a conference call at 8:30 a.m. ET on Thursday.
Write to Al Root at [email protected]
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