Shares of the industrial conglomerate Honeywell International (NASDAQ: HON) fell today after the company reported its second-quarter results. While Honeywell beat Wall Street’s revenue and earnings expectations in the quarter, investors were disappointed that management lowered the company’s full-year earnings guidance.
Honeywell’s share price was down by 4.9% as of 3:55 p.m. ET.
Overall, Honeywell had a very solid second quarter. Sales increased 5% to $9.6 billion, which outpaced analysts’ consensus estimate of $9.4 billion. And the company’s non-GAAP (adjusted) earnings per share of $2.49 beat Wall Street’s average estimate of $2.42.
In a press release, Honeywell CEO Vimal Kapur said that the company once again met or exceeded its guidance “across all metrics” in the quarter.
While true, it was management’s revised full-year earnings guidance that caught investors’ attention today. The company now expects adjusted earnings per share (EPS) between $10.05 and $10.25, down from prior guidance of $10.15 to $10.45.
Part of the reason for the downward revision is that Honeywell’s more profitable short-cycle businesses “are not accelerating as much as we had hoped,” Honeywell CFO Greg Lewis said on the earnings call.
That took the wind out of the sales for Honeywell’s strong second-quarter results.
While Honeywell had a mostly impressive quarter, a downward revision for full-year earnings guidance is never something investors want to see.
Honeywell’s share price has underperformed the broader market this year, losing 3.5% compared to the S&P 500‘s 13.2% gain. With a volatile share price and management making a downward revision for full-year earnings, investors may want to sit on the sidelines with Honeywell right now to see how the next two quarters play out.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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