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.
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.
“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.
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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