Will 2017 Be a Down Year for Honeywell International Inc. (NYSE:HON) Stock?

Honeywell International Inc. (NYSE:HON) reported fourth quarter earnings last month, according to which the company’s revenue in the period was $9.99 billion, lower than the projected $10.15 billion, while EPS of $1.74 was in-line with the estimates. The New Jersey-based aerospace and consumer products company’s revenue slid by 1% in the period. Aerospace and Safety and Productivity Solutions segments declined by 5%, but Home and Building Tech segments saw a growth of 2%. Performance Materials and Tech also experienced a surge in revenue. Aerospace equipment business was down amid overall weaker market conditions and Honeywell’s competitors like 3M, GE, Dover (NYSE:DOV) and Illinois Tool Works (NYSE:ITW) are also taking a beating in this domain.

2017 is not expected to bring any growth for Honeywell International Inc. (NYSE:HON) as well. Jet business is expected to decline by double-digits (around 20%). Honeywell’s CEO Dave Cote is set to step down this year. Last year, Honeywell’s stock plummeted amid Cote’s conservative guidance for 2017. Mr. Cote later admitted that he was wrong for not giving a positive outlook for the year. However, in the fourth quarter report, Honeywell International Inc. (NYSE:HON)reaffirmed its previous guidance for 2017, according to which organic sales growth will be in the range of 1%-3%, while full year EPS is expected to be in the range of $6.85 – $7.10, less than the analysts’ forecast of $7.08. Honeywell International Inc. (NYSE:HON) will be forced to spend a fortune on OEM incentives, which are cash payments, or discounts offered by equipment companies to aircraft manufacturers for using their products to ensure their presence on new platforms.
Honeywell International Inc. (NYSE:HON) is getting ready for a business transformation process. The incoming CEO has outlined his plans to make Honeywell a “Software Industrial” company, which is definitely the need of the hour, and many companies in this domain, including GE and Rockwell have already taken steps towards software. But transformation takes time, and stock price does not get stable during this shift. The company is also planning to increase its spending on R&D and automation.
Analysts also believe that President Trump’s plans to ramp up spending on infrastructure and tax benefits will not weigh in to make a difference in Honeywell International Inc. (NYSE:HON equation due to a stronger dollar and because of the fact that the company focuses on exports heavily.

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