Shares of Honeywell (HON) fell in pre-market trading even as the industrial conglomerate reported robust results for its second quarter of FY24. The company reported adjusted earnings per share of $2.49, which beat analysts’ consensus estimate of $2.42 per share.
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Sales increased by 5% year-over-year, with revenue hitting $9.6 billion, surpassing analysts’ expectations of $9.4 billion.
Honeywell’s CEO Comments
Vimal Kapur, Chairman and CEO of Honeywell, stated that the company’s aerospace business continues to drive its growth, but its other business segments are also contributing significantly, “with three out of four segments showing positive growth for the quarter.”
Indeed, Honeywell’s aerospace business clocked revenues of $3.9 billion, up by 16% year-over-year, and comprised more than 35% of the company’s total revenues in the second quarter.
Honeywell’s Capital Deployment Strategy
The company is deploying $6.4 billion in capital for mergers and acquisitions, dividends, share repurchases, and capex. Honeywell recently closed a $5 billion acquisition of Access Solutions. Additionally, the industrial conglomerate announced a $1.9 billion acquisition of CAES Systems and a $1.8 billion acquisition of Air Products’ (APD) LNG process technology and equipment business.
HON”s FY24 Outlook
Looking forward, management has raised its FY24 outlook and now expects revenues to be in the range of $39.1 billion to $39.7 billion, with organic sales growth likely to be between 5% and 6%. The company has projected adjusted earnings to be in the range of $10.05 to $10.25 per share, up 6% to 8% year over year.
For reference, analysts expect earnings of $10.26 per share on revenues of $38.77 billion.
Is HON a Good Stock to Buy?
Analysts remain cautiously optimistic about HON stock, with a Moderate Buy consensus rating based on seven Buys and six Holds. Over the past year, HON has increased by more than 4%, and the average HON price target of $227.73 implies an upside potential of 6.6% from current levels. These analyst ratings are likely to change following HON’s results today.
