Honeywell set to report Q3 earnings amid business reorganization

Honeywell International (NASDAQ:HON [https://seekingalpha.com/symbol/HON]) will report Q3 earnings on Thursday, October 23rd, before market open, with focus on its Solstice Advanced Materials spinoff and ongoing quantum computing projects.

Wall Street expects [https://seekingalpha.com/symbol/HON/earnings/estimates] the industrial conglomerate to post EPS of $2.57 (-0.4% Y/Y), while revenue is expected to rise 4.7% to $10.16B.

The Charlotte based firm has recently approved the spinoff of Solstice Advanced Materials, a specialty chemicals business that made nearly $4 billion in revenue last year. Solstice will begin trading on October 30, with Honeywell shareholders receiving one Solstice share for every four Honeywell shares.

The company is reorganizing itself into three separate businesses, including one focused on aerospace. Honeywell said supply chain conditions for aviation electronics are improving and expects private jet deliveries to hit record levels over the next decade.

An analyst said the separation is expected to enhance strategic focus and shareholder value, adding [https://seekingalpha.com/article/4820060-honeywell-attractively-valued-with-potential-upside-post-breakup] that “each of the three new companies that will be spun off in the coming 18 months has the potential to bring additional upside through independent valuations and historically more attractive multiples in their respective business lines.”

Honeywell’s quantum computing unit, Quantinuum, drew investor attention after Nvidia’s venture capital arm participated in a $600 million funding round, valuing the business at $10 billion. The proceeds will support the development of Quantinuum’s next-generation Helios system and other quantum computing projects.

Analysts remain largely bullish [https://seekingalpha.com/symbol/HON/ratings/sell-side-ratings] on Honeywell, with Seeking Alpha analysts and Wall Street maintaining Buy ratings, while Seeking Alpha Quant ratings classify the stock as a Hold.

BofA Securities said it has a $275 price target for Honeywell, noting that it trades at a lower multiple than similar companies because near-term results are uncertain, but expects Honeywell’s earnings outlook to improve. It flagged risks if the company pays too much for acquisitions, struggles to integrate them, or sees slower growth in short-term markets.

Over the last two years, HON has beaten EPS estimates [https://seekingalpha.com/symbol/HON/earnings/eps-surprise-summary] 100% of the time and has beaten revenue estimates 63% of the time.

In the last three months, EPS estimates have seen 13 upward revisions [https://seekingalpha.com/symbol/HON/earnings/revisions] and four downward, while revenue estimates have seen 10 upward revisions and three downward.

The stock has gained [https://seekingalpha.com/symbol/HON/charting?interval=1M] 0.08% over the past month but is down [https://seekingalpha.com/symbol/HON/charting?interval=YTD] 7.6% YTD.

MORE ON HONEYWELL INTERNATIONAL

* Honeywell: Attractively Valued With Potential Upside Post Breakup [https://seekingalpha.com/article/4820060-honeywell-attractively-valued-with-potential-upside-post-breakup]
* Wall Street Lunch: Honeywell Takes Quantum Leap As Nvidia Invests $600M [https://seekingalpha.com/article/4819584-wall-street-lunch-honeywell-takes-quantum-leap-as-nvidia-invests-600m]
* Earnings week ahead: TSLA, KO, T, INTC, NFLX, F, GM, AAL, LUV, PG, GE, MMM, CLF, AGNC, and more [https://seekingalpha.com/news/4505221-earnings-week-ahead-tsla-ko-t-intc-nflx-vz-f-gm-aal-luv-pg-ge-mmm-clf-agnc-and-more]
* Honeywell board approves spinoff of Solstice Advanced Materials unit [https://seekingalpha.com/news/4504731-honeywell-approves-spinoff-of-solstice-advanced-materials-unit]