Why Honeywell (HON) Stock is Falling Today

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Oct 24, 2024
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Honeywell International Inc. (HON, Financial) saw its stock drop by 4.51% today, with shares currently priced at $210.41. This decline followed the release of the company's latest earnings report, which, despite exceeding earnings expectations, fell short in revenue figures, impacting investor sentiment negatively.

In the latest financial results, Honeywell reported earnings of $2.58 per share, slightly above analyst predictions by $0.07. However, revenue for the third quarter came in at $9.73 billion, missing the consensus estimate of $9.9 billion. The earnings beat was partly due to lower-than-expected share count and effective tax rate, contributing to the positive per-share performance.

The company's segment performance showed mixed results: aerospace sales decreased by 2%, industrial automation dropped 5%, energy sales remained flat, while building automation sales saw a year-over-year increase of 3%. Meanwhile, CEO Vimal Kapur highlighted the strength in order rates and sequential growth in backlog, though these results exclude the impacts of acquisitions. Despite the earnings beat, Honeywell has adjusted its full-year 2024 guidance, raising the lower end of its earnings forecast but reducing expectations for revenue and free cash flow.

Financially, Honeywell holds a market capitalization of $136.70 billion and maintains a strong Altman Z-score of 3.66, indicating solid financial health. Its Price-to-Earnings (PE) ratio stands at 23.99, and it offers a dividend yield of 2.07%, which is close to its 2-year low. The company's GF Value is estimated at $222.27, suggesting that the stock is fairly valued based on our GF Value assessment.

Despite the current challenges, Honeywell's profitability metrics remain robust, with expanding operating margins and strong ROE at 34.52%. The firm's focus on expanding its installed base and deriving a significant portion of its revenue from recurring aftermarket services highlights its strategic pivot towards sustainable growth. Investors should consider these factors alongside the company's valuation metrics when evaluating Honeywell's stock (HON, Financial).

Disclosures

I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.