Honeywell's Q3 Earnings Beat Estimates, Aerospace Sales Rise Y/Y

Honeywell International Inc. HON reported third-quarter 2024 adjusted earnings of $2.58 per share, which surpassed the Zacks Consensus Estimate of $2.50. The bottom line increased 8% year over year on an adjusted basis. On a reported basis, the company’s earnings were $2.16 per share, down 5%.Total revenues of $9.73 billion missed the consensus estimate of $9.90 billion. The top line increased 6% from the year-ago quarter, driven by strength in the Aerospace Technologies segment. Organic sales also increased 3% year over year.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Segmental DetailsIn October 2023, HON planned to realign its business segments to three megatrends, which were automation, the future of aviation and energy transition. Beginning in the second quarter of 2024, the company started operating under the segments discussed below.Aerospace Technologies’ quarterly revenues were $3.91 billion, up 12% year over year. Growth in both commercial aviation and defense and space markets drove revenues. Our estimate for the segment’s revenues was $3.95 billion.Industrial Automation revenues fell 5% year over year to $2.50 billion due to volume softness in warehouse & workflow solutions and safety & sensing technologies businesses. Our estimate for segmental revenues was pegged at $2.62 billion.Building Automation revenues totaled $1.75 billion, up 14% year over year. The upside was driven by ongoing strength in the building solutions business, partially offset by softness in building products unit. Our estimate for the segment’s revenues was $1.70 billion.Energy and Sustainability Solutions’ revenues increased 1% to $1.56 billion, supported by strength in the advanced materials business and increased demand for fluorine products. Our estimate for the segment’s revenues was $1.57 billion.Honeywell Price, Consensus and EPS Surprise Honeywell price-consensus-eps-surprise-chart | Honeywell QuoteCosts/Margins of HONThe company’s total cost of sales (cost of products and services) was about $6 billion, up 5.4% year over year. Selling, general and administrative expenses were $1.4 billion, up 11.7%. Interest expenses and other financial charges were $297 million compared with $206 million a year ago.Operating income was $1.86 billion, down 3.5% year over year. The operating income margin was 19.1% compared with 20.9% in the year-ago period.HON’s Balance Sheet/Cash FlowHoneywell had cash and cash equivalents of $10.6 billion compared with $7.9 billion at the end of December 2023. Long-term debt was $25.9 billion, higher than $16.6 billion at 2023-end.In the third quarter, it generated net cash of $2 billion from operating activities compared with $1.81 billion in the prior year period. Capital expenditure totaled $279 million compared with $249 million in the previous year period.Free cash flow in the quarter was $1.72 billion compared with $1.56 billion in the year-ago period.Honeywell’s 2024 GuidanceFor 2024, Honeywell expects sales to be in the band of $38.6-$38.8 billion compared with the prior expected range of $39.1-$39.7 billion. It reported sales of $36.7 billion in 2023. Organic sales are expected to increase in the band of 3-4%.HON expects a segment margin in the range of 23.4-23.5% compared with 22.7% in 2023. Adjusted earnings per share are expected to be between $10.15 and $10.25 compared with the previous guided range of $10.05-$10.25. The metric indicates an increase from $9.16 reported in 2023. It expects operating cash flow to be in the range of $6.2-$6.5 billion , lower than $6.6- $7.0 billion projected previously. Free cash flow is expected to be in the range of $5.1-$5.4 billion compared with $5.5-$5.9 billion guided earlier.Zacks Rank & Stocks to ConsiderHoneywell presently carries a Zacks Rank #4 (Sell).Some better-ranked companies are discussed below:Markel Group Inc. MKL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.MKL delivered a trailing four-quarter average earnings surprise of 35.4%. In the past 60 days, the Zacks Consensus Estimate for Markel’s 2024 earnings has increased 1.8%.Allegion plc ALLE presently carries a Zacks Rank of 2. In the past 60 days, the Zacks Consensus Estimate for ALLE’s 2024 earnings has remained steady.Parker-Hannifin Corporation PH currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 11.2%.In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 (ending June 2025) earnings has increased 0.3%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Honeywell International Inc. (HON): Free Stock Analysis Report Parker-Hannifin Corporation (PH): Free Stock Analysis Report Markel Group Inc. 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