It has been about a month since the last earnings report for Honeywell International Inc. HON. Shares have added about 6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Honeywell Posts In-Line Q4 Earnings, Reaffirms View
Honeywell reported relatively modest fourth-quarter 2016 results. Quarterly adjusted earnings per share (EPS) came in at $1.74, in line with the Zacks Consensus Estimate, but up from $1.53 in the year-ago quarter. GAAP EPS for the quarter was $1.34 per share compared with $1.54 in the year-ago quarter.
Fourth-quarter revenues were flat at $9,985 million, compared with $9,982 million in the year-ago quarter. However, the revenues missed the Zacks Consensus Estimate of $10,152 million. Organic revenue growth was down 1% year over year due to the spin-off of Resins and Chemicals in Performance Materials and Technologies and the divestiture of the Aerospace government services business. The decline was partially offset by acquisitions of Elster and Intelligrated.
For full-year 2016, the company reported adjusted earnings of $6.60 per share compared with prior-year’s earnings of $6.10. Revenues for the full year were $39,302 million compared with $38,581 million in the prior year. The improvement in revenues was primarily attributable to the superior performance of the Home and Building Technologies and Performance Materials and Technologies segments.
Operational Details
Total segment’s profit was $1,899 million compared with $1,880 million in the year-ago quarter. Overall segment profit margin slightly improved to 19.0% from 18.8% in the prior-year period, an increase of 20 basis points (bps).
Operating income (excluding pension mark-to-market adjustment and debt refinancing expense) increased to $2,012 million from $1,800 million in fourth-quarter 2015. Operating margin during the quarter was 16.2%, down 120 bps.
Segmental Performance
Aerospace sales were $3,666 million in the reported quarter, down 8% year over year. The downside was due to lower volumes in Business and General Aviation, program accomplishment of the international defense and U.S. Space businesses and weakness in commercial helicopter trade.
Home and Building Technologies sales came in at $2,800 million, up 13% year over year. The upside was driven by robust Distribution and Building Solutions businesses, double-digit growth in China and India, as well as new product introductions in Environmental and Energy Solutions.