Shares of Honeywell on Thursday afternoon were paring earlier losses after the industrial conglomerate reported mixed fourth-quarter results and weak forward guidance. While earnings, profit margins, and cash flow came in slightly ahead of expectations, sales were light across the board. Revenue rose 2.8% year over year on a reported basis to $9.44 billion versus expectations of $9.7 billion, according to estimates compiled by data provider LSEG. Organically, sales grew 2%. Adjusted earnings per share of $2.60 advanced 3.2%, a penny above the $2.59 consensus forecast. Segment margin , similar to an adjusted operating income margin, grew 64 basis points to 23.5%, slightly ahead of expectations and ahead of the high-end of management’s previous forecast. HON 1Y mountain Honeywell 1 year Honeywell came off morning lows as the overall stock market extended its rally in last afternoon trading. Shares are still down about 3% on the session and 6.5% year to date. Bottom line The quarter wasn’t great. Sales were disappointing as even the star of the show, Aerospace, came up short. What keeps us interested in the stock and prompted us to purchase more shares Thursday morning is the view that things are set to improve from here. Segment margin performance was largely better than expected, with the exception of Building Technologies, and cash flow generation came in solidly above expectations. Neither of these areas of strength was enough to offset the quarterly sales or overall segment profit misses. However, the margin and cash flow performances do speak to management effectively executing on the variables in their control by making the company leaner and positioning the company to win as the macroeconomic backdrop improves. Looking ahead, management expects their short-cycle business – sales that don’t take as much time to complete – to rebound in the second half of the year. On the post-earnings call, the team said, “Outlook is somewhat tempered by the uncertain…
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