Honeywell International (HON) produces avionics equipment, small jet engines, industrial materials, climate control systems and automotive products. It has also increased its dividend for nearly a decade. Honeywell will join the list of Dividend Achievers with just a few more dividend increases.
This article will discuss Honeywell’s most recent earnings report, guidance for 2018, dividend history, recession performance and current valuation to determine if now is the right time to buy shares of the company.
Earnings Overview
Honeywell reported fourth quarter and full year 2018 earnings on 1/26/2018. Adjusting for a charge due to tax reform, the company earned $1.85 per share during the quarter. This was $0.01 above analysts’ estimates and 8% above the year-ago period. Revenue grew 8.6% to $10.84 billion. This was $90 million above expectations.
Breaking results down further, the Aerospace division saw 5% organic sales growth due in large part to the increased number of commercial plane delivered. Aerospace is the largest component of Honeywell and accounted for 36% of quarterly revenues. Aftermarket services were also in high demand during the quarter. This is important because approximately two-thirds of revenues from the Aerospace division are related to aftermarket services.
The company’s Home and Building Technologies segment, which provides security, fire safety and heating and cooling sensors, grew sales 3% in the fourth quarter. Sales for fire systems were strong in the U.S. and around the world. Aerospace strength was especially strong in China, where sales grew high single digits. Home and Building Technologies represented almost a 24% of sales in the fourth quarter.
Performance Materials and Technologies, which produced about a quarter of sales, saw growth in all of its businesses. The company continues to point out that its home insulation product Solstice is performing quite well around the world. This innovative insulation product allows customers to keep their home heating and cooling costs down.
Safety and Productivity Solutions division is the smallest part of the company and contributed 13.6% of revenues for the quarter. Sales were up a robust 12% organically, as orders and backlog were up sharply year over year. Sales were up double-digits for the company’s Intelligrated and Retail products.
