Honeywell drops 4% after Q2 earnings

Honeywell International (HON.US) launched today's trading with a bearish price gap. Drop was triggered by release of Q2 2024 earnings report. While Honeywell reported better than expected results for the second quarter, the company decided to cut full-year earnings forecasts, what is putting pressure on the stock.

Honeywell's total Q2 sales beat expectation, with company posting higher-than-expected revenue in each of 4 major segments. However, free cash flow turned out to be slightly weaker than expected. Nevertheless, it was forecasts that trigger a sell-off. Company revised lower its full-year adjusted EPS and free cash flow forecast. While revenue and organic sales growth forecasts were improved, investors seem to be focused on profits.

Q2 2024 results

• Sales: $9.58 billion vs $9.42 billion expected (+4.7% YoY)
  • Aerospace Technologies: $3.89 billion vs $3.76 billion expected
  • Industrial Automation: $2.51 billion vs $2.50 billion expected
  • Building Automation: $1.57 billion vs $1.56 billion expected
  • Energy and Sustainability: $1.60 billion vs $1.59 billion expected
• Organic sales: +4% vs +2% expected
  • Aerospace Technologies: +16% vs +12.6% expected
  • Industrial Automation: -8% vs -7.9% expected
  • Building Automation: +1% vs +1.5% expected
  • Energy and Sustainability: +3% vs +4.4% expected
• Adjusted EPS: $2.49
• Free cash flow: $1.11 billion vs $1.2 billion expected (-1.3% YoY)

Q3 2024 forecast

• Sales: $9.8-10.0 billion vs $9.83 billion expected
• Adjusted EPS: $.245-2.55 vs $2.55 expected

Full-year 2024 forecast:

• Sales: $39.1-39.7 billion, up from previous forecast of $38.5-39.3 billion
• Organic sales: +5-6%, up from +4-6% in previous forecast
• Adjusted EPS: $10.05-10.25, down from $10.15-10.45 in previous forecast
• Free cash flow: $5.5-5.9 billion, down from $5.6-6.0 billion in previous forecast

Honeywell International (HON.US) launched today's trading lower and continued to drop at the start of the Wall Street session. However, sellers failed to break below the lower limit of the Overbalance structure in the $199 area, and stock began to recover afterwards. Source: xStation5