Honeywell International (HON): A Closer Look at the Recent Stock Decline

Honeywell International (HON) has been a prominent player in the industrial conglomerate space, but its stock price has been declining recently. This article aims to explore the primary factors contributing to this decline and provide insights into the company's earnings and revenue growth trends.



Primary Factors Contributing to Honeywell's Stock Decline

1. Soft Revenue and Earnings Miss: In the third quarter of 2024, Honeywell reported revenue of $9.73 billion, which was below the $9.9 billion consensus. Earnings per share (EPS) came in at $2.58, $0.07 better than expectations but still below the high end of guidance. This underwhelming performance led to a 4% drop in the stock price (Honeywell, Feb 6, 2025).
2. Earnings Warning: The company provided a disappointing earnings outlook, lowering its forecast for revenue and free cash flow while raising the lower end of its full-year earnings guidance. This warning likely contributed to investor concerns and the subsequent decline in the stock price.
3. Portfolio Transformation: Honeywell has been in a near-constant state of portfolio transformation over the past decade, announcing the spin-off of its Advanced Materials business and closing several acquisitions. While these moves make sense on paper, investors are still waiting for the payoff, which may be contributing to the stock's underperformance compared to the S&P 500 over the past five years.
4. Market Sentiment: The broader market sentiment and macroeconomic challenges may also be playing a role in the decline of Honeywell's stock price. The company's backlog grew 11% to a record $35.3 billion, but ongoing macroeconomic challenges could be weighing on investor confidence in the company's prospects.



Earnings and Revenue Growth Trends Contributing to Honeywell's Performance

1. Earnings Growth: In 2024, Honeywell reported EPS of $8.71, up 3% year over year (YoY). This growth was driven by the company's strong operational execution and sequential growth in its backlog, despite facing macroeconomic challenges (Honeywell, Feb 6, 2025). Over the past four quarters, Honeywell has surpassed consensus EPS estimates four times, indicating consistent earnings growth (Zacks Investment Research, Feb 10, 2025). The company's adjusted EPS for 2024 increased 4% to $9.89, with a 9% increase to $10.34 excluding the impact of the Bombardier agreement (Honeywell, Feb 6, 2025).
2. Revenue Growth: In 2024, Honeywell's sales increased 5% YoY, with organic sales growth of 3% (or 4% excluding the impact of the Bombardier agreement). This growth was driven by strong performance in long-cycle businesses, which outpaced short-cycle recovery within Industrial Automation (Honeywell, Feb 6, 2025). Over the past four quarters, Honeywell has topped consensus revenue estimates three times, demonstrating consistent revenue growth (Zacks Investment Research, Feb 10, 2025). For 2025, Honeywell expects sales of $39.6 billion to $40.6 billion, with organic sales growth in the range of 2% to 5%. This guidance assumes a mid-year close of the previously announced sale of the company's Personal Protective Equipment business (Honeywell, Feb 6, 2025).



In conclusion, Honeywell International's stock price decline can be attributed to a combination of factors, including soft revenue and earnings misses, earnings warnings, portfolio transformation, and market sentiment. Despite these challenges, the company's earnings and revenue growth trends have contributed to its overall performance. Investors should closely monitor Honeywell's progress and consider the broader market context when evaluating the company's prospects.