Shares of Honeywell (HON) were under pressure Thursday after the industrial conglomerate reported disappointing third-quarter results and weak forward guidance. While earnings and cash flow came in slightly ahead of expectations, there wasn’t much else to get excited about for the rest of the year. Revenue ticked up 2% year over year organically to $9.21 billion, shy of analysts’ expectations of $9.23 billion, according to estimates compiled by LSEG, formerly known as Refinitiv. Adjusted earnings-per-share of $2.27 advanced 1% annually, edging out the consensus forecast of $2.23 a share. Segment margin, similar to an adjusted operating income margin, grew roughly 80 basis points to 22.6%, a slight miss but equal to the high-end of management’s guidance. HON YTD mountain Honeywell YTD Unfortunately, Honeywell hit a 52-week low in Thursday’s terrible market. The stock has dropped nearly 18% year to date compared to the S & P 500 Industrials Sector ‘s nearly 1% decline in 2023. Bottom line Thank goodness for aerospace, the only segment to outperform expectations with double-digit organic growth on a percentage basis in both commercial aviation as well as defense and space. Outside of that, and slightly better-than-expected cash flow, the numbers were not that inspiring. Moreover, guidance for the remainder of the year was mixed: Sales are expected to be better than we thought. Earnings and free cash flow forecasts came up a bit short at the midpoint (though did bracket expectations). We would note that Honeywell has a tendency to report results at the higher end of previously provided ranges. So, why stick around after a quarter like this? Because, while end markets remain choppy, things are improving as we head into 2024 and the stock trades well below its 5-year average valuation based on both price-to-earnings and in terms of the annual dividend yield, which currently stands at around 2.5%. Cheap stock, plus improving fundamentals and end market dynamics, equal…
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