Honeywell International Inc. (NASDAQ: HON) Earnings Report Analysis

• Honeywell's earnings per share (EPS) of $2.16 missed the estimated $2.50, with revenue also falling short at approximately $9.73 billion.
• The company's stock experienced a 2.5% decline following the earnings report, attributed to lower-than-expected sales and a downward revision of its guidance.
• Honeywell surpassed profit expectations with an adjusted EPS of $2.58, and announced significant acquisitions and strategic shifts, including exiting the PPE sector.

Honeywell International Inc. (NASDAQ: HON) is a multinational conglomerate known for its diverse range of products and services, including aerospace systems, building technologies, and performance materials. The company competes with other industrial giants like General Electric and Siemens. On October 24, 2024, Honeywell reported earnings per share (EPS) of $2.16, missing the estimated $2.50. The company's revenue was approximately $9.73 billion, slightly below the expected $9.90 billion.

Following the earnings report, Honeywell's stock experienced a 2.5% decline early on Thursday. This drop was due to the company's third-quarter sales falling short of estimates and a subsequent lowering of its guidance. Despite these challenges, Honeywell managed to surpass profit expectations, with adjusted earnings per share reported at $2.58, exceeding Wall Street's expectations of $2.51 per share, as highlighted by Barrons.

Honeywell's third-quarter results showed a sales figure of $9.7 billion, marking a 6% increase in reported sales and a 3% rise in organic sales. The company's operating margin stood at 19.1%, while the segment margin reached 23.6%, both surpassing the high end of previous guidance. Despite a 4% decrease in operating income and a contraction of 180 basis points in operating margin, segment profit increased by 6% year over year, driven by strong performance in Aerospace Technologies.

During the quarter, Honeywell completed significant acquisitions, including a $1.9 billion purchase of CAES Systems and a $1.8 billion acquisition of Air Products' LNG Business. The company also announced plans to spin off its Advanced Materials Business and exit the Personal Protective Equipment (PPE) sector. These strategic moves are part of Honeywell's efforts to streamline operations and focus on core areas.

Honeywell's financial metrics provide insight into its market valuation. The company's price-to-earnings (P/E) ratio is approximately 25.24, indicating the price investors are willing to pay for each dollar of earnings. The price-to-sales ratio stands at about 3.78, reflecting the market's valuation of its revenue. Honeywell's enterprise value to sales ratio is around 4.27, and the enterprise value to operating cash flow ratio is approximately 23.86. The debt-to-equity ratio is about 1.04, highlighting the company's use of debt financing relative to its equity. Lastly, Honeywell's current ratio is about 1.44, suggesting its ability to cover short-term liabilities with short-term assets.