Honeywell International Inc. (NYSE:HON) would release its fourth quarter and full year 2013 financial results on Friday, Jan. 24. The company will also hold a conference call with investors at 9:00 a.m. EST.
Based in Morris Township, New Jersey, Honeywell is a Fortune 100 diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; turbochargers; and performance materials.
Wall Street expects Honeywell to earn $1.21 a share, according to analysts polled by Thomson Reuters. The consensus estimate implies an increase of 10 percent from $1.10 a share earned in the same period last year.
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Honeywell's earnings have topped Street view thrice in the past four quarters, with upside surprises in the range of 0.9 percent to 6.1 percent. The consensus earnings estimate has declined by a penny over the past 90 days.
Quarterly revenue is expected to increase 6.4 percent to $10.19 billion, with low and high end of the estimates coming at $10.12 billion and $10.27 billion, respectively.
For the full year, analysts expect earnings of $4.95 a share on revenue of $38.85 billion. Honeywell sees 2013 earnings of $4.90-$4.95 per share on revenue of $38.8 billion to $39.0 billion.
Honeywell is benefiting from a portfolio mix of short- and long-cycle businesses, improving end markets, consistent new product introductions, continued penetration in high-growth regions.
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The company's short-cycle businesses, particularly Energy, Safety and Security, and Turbo Technologies are benefiting from improving end markets, while long-cycle businesses are maintaining a robust backlog, driven by favorable macro trends and strong win rates.
Investors will look at the performance of key segments namely Automation and Control Solutions; Aerospace; and Performance Materials and Technologies.
Aerospace sales could be the key focus amid falling defense and space sales as a result of planned ramp downs and program delays, as well as supply chain constraints.
The Street will look at commercial original equipment (OE) sales and OE build rates and may need some color on aftermarket growth rates.
Meanwhile, an improving housing market and acquisitions may benefit Automation and Control segment via strong residential end markets, and growth in commercial retrofit activity.
Emerging market commentary, especially China, should be another focal point. Future China growth should outperform relatively, even if that country's overall pace of economic expansion slows further.
Investors might focus on the sales of turbo business that provides turbochargers for commercial and passenger vehicles as they could be the key sales and margin driver for the next five years.
Honeywell's Garrett Turbocharger division, reported within the Transportation Systems segment along with Friction Materials, is approaching $3 billion in revenues, or roughly 8 percent of company total, with operating margins likely in mid-teens.
Although accounting for less than 10 percent of current sales, Garrett can still move the profit "needle" for Honeywell due to much more rapid expected turbocharger sales and profit expansion compared to the Honeywell corporate average.
Top line drivers include accelerating turbo penetration on gasoline combustion engines, particularly in North America, driven by emissions regulations, as well as continued emerging markets automotive expansion, improving European auto build rates.
A turbocharged passenger vehicle gasoline engine can deliver up to 20 percent better fuel economy over a non-turbocharged equivalent. Rising global fuel efficiency mandates are also likely to continue to drive turbo penetration.
or the third quarter, Honeywell earned $990 million, or $1.24 a share, compared to $950 million, or $1.20 a share, last year. Sales rose to $9.65 billion from $9.34 billion a year-ago.
Shares of HON, which trade 16.2 times its forward earnings, traded between $67.95 and $91.56 during the past 52-weeks.
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