Honeywell Delivers Mixed Q3 Results, Updates Guidance

Honeywell (HON) delivered mixed Q3 2021 results despite registering sales growth in all four segments. The company has since updated its full-year guidance to reflect a challenging macro environment due to supply-chain constraints. HON shares fell 3.17% to close at $217.40 on October 22.

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Honeywell is a U.S. technology company that delivers industry-specific solutions that include aerospace products and services and control technologies for buildings and homes.

Sales in the quarter were up 9% year-over-year to $8.47 billion, falling short of consensus estimates of $8.65 billion. Organic sales were up 8% year-over-year, driven by 38% growth in the Aerospace commercial aftermarket. Additionally, Honeywell achieved 21% growth in Safety and Productivity Solutions, 29% growth in UOP, and 14% growth in the Performance and Materials segment.

Q3 adjusted EPS increased 29% from the same quarter last year to $2.02, exceeding consensus estimates of $1.99. Operating margin in the quarter improved by 180 basis points to 18.6%, as Segment margins improved by 130 basis points to 21.2%. (See Top Smart Score Stocks on TipRanks)

During the quarter, Honeywell spent $1.5 billion on share buybacks, dividends, capital expenditures, and acquisitions.

For the full year, Honeywell is projecting sales in the range of $34.2 billion to $34.6 billion, with organic sales expected to grow by between 4% and 5% due to supply-chain constraints. Adjusted EPS should range between $8 and $8.10, with operating cash flow expected between $5.9 billion and $6.2 billion.

Meanwhile, Deutsche Bank analyst Nicole Deblase recently reiterated a Buy rating on the stock and lowered the price target to $248 from $251, implying 14.08% upside potential to current levels.

Consensus among analysts is a Moderate Buy based on 5 Buys, and 5 Holds. The average Honeywell price target of $239.50 implies 10.17% upside potential to current levels.

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