Honeywell International reports second-quarter earnings Thursday morning, and the stakes are unusually high. This is the first earnings report since the company completed its transformation into a pure-play automation company after spinning off Honeywell Aerospace Technologies.
HON stock was trading near $231.94 heading into the report.
Honeywell International Inc., HON
Analysts are expecting EPS of $2.51 and revenue of $9.55 billion. Both figures represent year-over-year declines of about 7.7%. Sequentially, though, revenue is expected to grow 4.5% from the $9.14 billion posted last quarter.
Last quarter was rough. Honeywell missed EPS estimates by 44.6%, posting $2.57 against a $4.64 consensus. Revenue also came in 1.5% below expectations. It was a painful quarter, and the bar for Thursday is different — but not necessarily lower.
It’s worth noting that the estimate collapse — EPS forecasts down 62.6% in 60 days, revenue estimates down 47.4% — largely reflects analysts recalibrating models after the aerospace spin-off, not a fundamental deterioration in the business.
Honeywell also closed its acquisition of Johnson Matthey’s Catalyst Technologies business for £1.325 billion on July 17, just six days before this earnings release. Investors will want early color on how that integrates.
The company now runs three automation businesses: Building Automation, Industrial Automation, and Process Automation & Technology. Building Automation is widely viewed as the standout. Analysts have pointed to it as a proof point that the new playbook can be replicated across the rest of the portfolio.
Process Automation & Technology is getting more scrutiny. Honeywell has exposure to softer oil and gas markets outside of LNG, and management is targeting 4%-to-6% revenue growth in markets that are only expanding at 3%-to-4%. That gap needs explaining.
Investors will also be watching Honeywell Forge, the company’s analytics platform. Management has leaned on it as a key growth driver, and Thursday will be a chance to show whether that narrative has legs.
Of the 24 analysts covering HON, 15 rate it a Buy, seven a Hold, and two a Sell. The consensus price target sits at $245.88, implying about 7% upside from current levels.
Options traders are pricing in a move of about $10.14 per share following the report, based on July 24 contracts. That works out to a roughly 4.4% implied move, putting the expected post-earnings range between $221.80 and $242.08.
Trading activity near the current price leans slightly defensive. At the $232.50 strike, puts are trading at $5.40 versus $4.74 for calls. Put volume is running at 59 contracts versus 33 on the call side.
That said, call open interest picks up at higher strikes — around $237.50 and $240 — suggesting some traders are still positioned for upside.
HON trades at 18.4 times trailing earnings but 27.2 times forward estimates. The stock closed Tuesday at $229.86.
The post Is Honeywell (HON) Stock a Buy Ahead of Thursday Earnings? appeared first on CoinCentral.
