Honeywell (NYSE: HON) is set to announce its Q1 2024 results on April 25, with expected revenue of $9.1 billion and adjusted earnings of $2.19 per share. The company is expected to benefit from increased aftermarket services for commercial aerospace, but a tough comparison for warehouse automation may impact sales growth. Despite this, Honeywell’s stock, currently around $195, is forecasted to have room for growth. The company’s earnings preview analysis offers more insights into the trends that will likely drive its results for the quarter.
HON stock performance in recent years has been volatile, with minimal change from $215 in early 2021 to around $195 currently, compared to a 35% increase for the S&P 500 over the same period. Honeywell underperformed the index in 2021 and 2023, showing returns of -2%, 3%, and -2% for those years, while the S&P 500 had returns of 27%, -19%, and 24% in the same period. In contrast, the Trefis High Quality Portfolio, consisting of 30 stocks, outperformed the S&P 500 each year, offering better returns with less risk.
Amid a challenging macroeconomic environment, including high oil prices and elevated interest rates, Honeywell’s valuation suggests potential for higher levels. With an estimated valuation of $226 per share, 15% above the current market price, Honeywell’s stock could see an increase. The company’s 2024 adjusted earnings guidance falls in the range of $9.80 to $10.10 per share, supporting the possibility of growth in its stock price. However, uncertainties in the market could impact Honeywell’s performance in the coming months.
In the previous quarter, Honeywell reported revenue of $9.4 billion, up 3% year-over-year, driven by growth in Aerospace and Performance Materials segments. On the other hand, Building Technologies and Safety & Productivity segments saw declines in sales. Despite the revenue growth, the company’s operating margin contracted, leading to adjusted earnings of $2.60 per share. The upcoming quarter is expected to follow a similar trend, with Aerospace leading sales growth while Safety & Productivity faces challenges due to weakness in the warehouse automation market.
Looking ahead, Honeywell’s Q1 performance will likely be driven by its Aerospace business, with growth potential in other segments in the upcoming quarters. The company anticipates a slight expansion in overall segment margin in 2024, particularly favoring the second half of the year. While HON stock appears reasonably priced, comparisons with its peers across industries can provide further insights into its performance metrics and potential for growth in the market.
