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Honeywell (HON) Q3 earnings exceed forecast, sales miss; lifts FY19 EPS outlook

Honeywell International Inc. (NYSE: HON) reported higher earnings for the third quarter of 2019, despite a decline in sales. Adjusted earnings exceeded analysts’ expectations, while sales missed. The company also revised up its full-year earnings guidance. The stock dropped modestly early Thursday, immediately after the announcement.

Honeywell (HON) Q3 earnings exceed forecast, sales miss; lifts FY19 EPS outlook

Earnings, excluding special items, rose 2.4% year-over-year to $2.08 per share during the three-month period from $2.03 per share last year. Analysts had forecast a decline. Net income, meanwhile, dropped to $1.62 billion or $2.23 per share from $2.34 billion or $3.11 per share in the third quarter of 2018.

Sales Down 16%

Dragging the bottom-line, net sales of the diversified technology company decreased 16% annually to $9.09 billion and missed estimates. Organic sales rose by 3%, driven by Aerospace, Process Solutions, and Building Technologies.

Related: Honeywell Q2 2019 Earnings Conference Call Transcript

“Honeywell Connected Enterprise drove double-digit connected software growth, continuing our transformation into a premier software industrial company. Our productivity rigor and the favorable impact of the 2018 spin-offs also contributed to our strong results and expanded segment margin, which was up 180 basis points to 21.2% in the quarter,” said CEO Darius Adamczyk.


The management narrowed its full-year 2019 sales guidance to the range of $36.7 billion to $36.9 billion from the previous estimate of $36.7-$37.2 billion. Organic sales growth outlook has been revised to 4%-5% from 4%-6%. It, meanwhile, revised up the midpoint of the adjusted earnings per share estimate to the range of $8.10 to $8.15 from the previous forecast of $7.95-$8.15 per share.

Share Buyback

The company said it is on track to meet the cash flow targets for the year as it continued to execute on its capital deployment strategy. It repurchased $1.0 billion of common shares during the quarter.

Honeywell’s shares gained 21% thus far this year. The majority of analysts have given the stock buy rating, with an average price target of $186.86. The stock slipped modestly early Thursday, immediately after the announcement, after closing the previous session lower.

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