When Honeywell International goes public, investors want to see growth from two places: better end markets and acquisitions.
HON -1.72% report its profits.
The industrial conglomerate will release its numbers for the second quarter on Thursday morning. On Wall Street, they expect Honeywell to report earnings per share of $2.42 on sales of $9.4 billion. This is up from $2.23 on sales of $9.1 billion last year.
In the last few quarters, sales have grown faster. This kind of sales growth was 3% in the first quarter. Honeywell thinks that growth will be between 4% and 6% for the whole year of 2024. This is because aerospace markets are getting better and customers are using up their stock of Honeywell products.
Honeywell, like many other industrial companies, has been having trouble with low orders because customers are happy to get rid of their extra stock. Investors will want to know what’s going on with that.
As Deane Dray of RBC wrote in a preview report, “the worst of destocking looks to be over.” “The key to [Honeywell’s] quarter and the rest of the year will be the short-cycle activity rebound that is built into Honeywell’s 2024 guide.”
Items that are small, cheap, and tend to move quickly are often called “short-cycle.” Parts for Boeing
Items that BA -3.44% builds jets are short-cycle, while items that it builds planes are long-cycle. People order them years ahead of time, and it takes a long time to build them.
Dray thinks Honeywell will stick to its prediction that cash earnings per share in 2024 will be between $10.15 and $10.45. He thinks it will be $10.30 a share, which is what most analysts who are tracked by FactSet think it will be.
Dray rates stocks Hold on. The price he wants shares to reach is $218.
In addition to growing on its own, Honeywell has been buying other companies to grow. In that area, the company was very busy in the past few months. It closed its $5 billion deal to buy a security business from Carrier and made deals for an LNG business from Air Products and an aerospace player called CAES.
APD: 1.64%. At 8:30 a.m. Eastern, management will talk about the results on a conference call. Another thing that management is likely to talk about is capital allocation.
As of Wednesday, Honeywell stock had lost about 2% so far this year, which is about 12% more than the S&P 500.
SPX is down 2.31 percent. The options markets suggest that after earnings, shares will go up or down by 2% to 3%. In the four quarters since the last report, shares have moved an average of almost 3%. After each of those reports, they went down.
