Al Root

Investors want to see a beat-and-raise quarter from Honeywell when it reports earnings Tuesday morning.

Wall Street is looking for first-quarter earnings per share of $2.21 from sales of $9.6 billion, according to FactSet. A year ago, the industrial conglomerate reported EPS of $2.25 from sales of $9.1 billion.

The company's February results didn't qualify as a beat-and-raise quarter. Honeywell reported EPS of $2.47, and while that was better than the $2.32 analysts projected, guidance was a disappointment.

Management said it expects 2025 earnings to land between $10.10 and $10.50 a share. The midpoint of $10.30 was below analysts' projection of $10.92. The midpoint of sales guidance is $40.1 billion, below analysts' current projection of $41.3 billion.

Shares fell 1.3% after the report.

The weak guidance "squelch[ed] breakup enthusiasm," wrote RBC analyst Deane Dray in a post-earnings report.

Along with earnings, Honeywell laid out plans to break apart into three companies -- one dedicated to automation, one to aerospace, and another to advanced materials. Automation would be the largest business, with about $18 billion in annual sales. Aerospace revenue is in the range of $15 billion. Advanced Materials is the smallest business, with about $4 billion in annual sales.

The breakup could help unlock value. Honeywell shares trade for about 19 times estimated 2025 earnings. Based on multiples of comparable stand-alone automation and aerospace firms, Honeywell, broken apart, could be worth $275 a share, or about 27 times estimated 2025 earnings. GE Aerospace, for example, trades for 36 times estimated 2025 earnings. Rockwell Automation trades for about 25 times estimated earnings.

Goldman Sachs analyst Joe Ritchie is positive on the stock heading into the quarter.

"Given healthy fourth-quarter 2024 orders (+11%) and a good start to the year, we believe Honeywell could return to beating and raising throughout the year," Ritchie wrote.

Shareholders hope so, although tariffs could hinder the ability to raise guidance. The company has Mexican manufacturing facilities, but Ritchie estimates Mexico accounts for less than 2% of total costs. He rates shares Buy and has a $240 price target on the stock.

Dray rates shares Hold and has a $211 price target.

Overall, 52% of analysts covering shares rate them Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Honeywell stock is about $233 a share.

Options markets imply shares will move about 4%, up or down, following earnings. Shares have moved about 3% following the past four quarterly reports. They have fallen all four times.

Coming into the week, Honeywell stock was down about 12% year to date, while the S&P 500 and Dow Jones Industrial Average were off about 6%.

Write to Al Root at allen.root@dowjones.com

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April 28, 2025 17:00 ET (21:00 GMT)

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