Investment "Logic"

On October 19, Honeywell announced their third quarter earnings results and they were fantastic.  Earnings came in at $2.03, beating out the $1.99 estimates while revenues came in at $10.76B which just edged expectations of $10.75B.  Organic sales came in at 7% which was the very high end of the anticipated range while margin expansion exceeded their range by 20 basis points on a 50 basis point high end.  On top of that, the company exceeded the guided amount of capital returned to shareholders via buybacks by $1.5B on a $3B guidance.  Hopefully, the company was buying back shares towards the end of the quarter when the stock was getting hit its hardest, but if it was, we certainly haven't seen it in the stock prices since - outside of the fact that they may not be in a window in which they can buy back shares now, resulting in less of a floor of protection for the stock.   All segments performed well for the company with SPS and Aero leading the way ...

Yesterday, I received a small number of shares of Honeywell spinoff Rezidio as a part of the spin-off process.  I have decided to sell the entire position at a price of $25.51.  While I expect the company to perform well long-term, in the short-term this is a declining sector given the slowdown we've seen in home building and company investments.  I anticipate the company to have to deal with this pressure over the next several quarters as a result and do not expect the stock to perform well.  One thing that I do see as an interesting opportunity for this company is what happens with the United Technologies/Rockwell Collins merger.  Should China decide to let this deal happen, United Technologies will likely split itself into 3 companies which will also include a home/HVAC space that I can see merging or being bought by Rezidio in the future.  That said, I don't think the homework effort is worth the small number of shares I will have in the company as ...

Back on April 20, Honeywell announced the results of their first quarter operations.  Results were strong, with earnings coming in a $1.95 and sales coming in at $10.4B - both of which were beats against expectations of $1.90 and $10.02B respectively.  Organic sales also beat guidance of 2% - 4%, by resulting in 5% along with 40 basis points of margin expansion and $1B of cash flow.  Additionally, the company spent $1.4B in share repurchases ($950M) and dividends since there weren't ideal investment opportunities to go after.  Growth was led by the aerospace division with 8% organic growth along with 6% organic growth from the Safety and Productivity solutions division.  Home and Business Technologies and Performance Materials and Technologies grew 2% and 3% organically, respectively.   Results were strong enough that the company raised EPS guidance to a range of $7.85 - $8.05, raising both the lower and upper ends.  They anticipate organic...

On Friday, Honeywell announced results for fourth quarter and fiscal year 2017.  As expected, results were mostly spectacular.  Earnings came in at $1.85 on organic sales of 6%.  Revenues were $10.8B while delivering free cash flow (FCF) of 123%.  They repurchased 10.3M shares and also increased the dividend by 12% during the quarter.  These results mostly topped analyst expectations where earnings beat by a penny and revenues beat by around $90M.  Many analysts were hoping for 7% organic growth, though, which was the one bad mark for the company.  That said, the company projected only 2% - 4% organic growth, so they well exceeded their own expectations.  It is important to note that after all of these numbers, the company did report a loss of $3.8B due to provisions for U.S. Tax reform.  But these same reforms also allowed the company to adjust earnings guidance for 2018 up to $7.75 - $8.00, which is in line with my personal estimates of...

As 2017 wraps up, I want to take a brief moment to review my performance on the year and then talk about what I'm looking for in 2018. While my intent is to keep things short, it's important that I set a common base.   First, all gain/loss percentages discussed are based upon either feedback from my portfolio tracking software or by pulling up tickers on the  Morningstar  web site's performance tabs for YTD or 2017 numbers on performance.  Numbers I state have the chance of being off a few percentage points compared to reality.  I will be doing various comparisons of my stocks against the performance of the S&P 500, excluding dividends.  Additionally, I'll be comparing the performance against the sectors which the stocks are a part of.  To do this, I'm using Spider (SPDR) ETF index funds, as these ETFs are known to track extremely close to each of their respective sectors.  These sector performances likely include the ...

On Friday, Honeywell announced third quarter results for fiscal 2017.  After preannouncing results last week there's not a lot of new information here, so my analysis will likely be fairly brief.  Headlines will say that the company met expectations, but that's only after the new expectations were set with the preannounced results.  The company delivered earnings of $1.75, which were at the high end of their guidance in July.  Sales came in at $10.1B with organic growth of 5%, led in part by aerospace.  It was back at the beginning of the year that everyone was panicking as to whether the company would be able to get any organic growth.  Free cash flow growth was excellent at 18%, providing plenty of funding for the spinoffs that were just announced.   Fourth quarter projections continue this growth as the company expects to have 4% - 6% organic revenue growth resulting in earnings in the range of $1.79 - $1.84.  To put things simply, t...

Before the opening bell yesterday morning, Honeywell announced the results of its portfolio analysis, an analysis that was spurred by activist investor pressure.  Third Point's Dan Loeb challenged Honeywell, shortly after new CEO Darius Adamczyk took the helm, that the company isn't doing enough to capture shareholder value and that they should spin off the Aerospace division.  After the company has done deep analysis of their portfolio of products, they agreed to do not 1, but 2 spinoffs from the company.  Neither spinoff, however, is the one that Third Point asked for.  Instead, the company is going to spin off their homes business - essentially the HVAC and fire protection products which they have (thermostats, filters, other equipment for home and businesses) as one business.  This business will be worth approximately $4.5B.  The second spinoff will be their transportation business, which is primarily rooted in their low-margin, but highly success...

Honeywell announced their second quarter results on July 21.  Results were a solid beat with earnings hitting the high end of guidance at $1.80, beating analyst estimates of $1.78.  Sales also beat expectations of $9.98B, coming in at $10.1B.  In addition, they handily beat estimates for organic growth registering 3% on what was guided to be a flat to 2% organic growth quarter.  This is a nice acceleration in organic growth, which fits the guidance that the company provided 6 months, or so, ago when there was a lot of concern with -2% decline in organic growth, which was fueled by lackluster performance in the aero group - primarily in the private jets and helicopters spaces.  Margins, overall, were up 50 basis points and free cash flow is up 39% year to date compared to last year.  Finally, they raised guidance on both earnings and sales, with the lower end of the earnings guidance provided raised ten cents to $7.00 while sales edged up to a range of $...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Back on Friday, Honeywell announced their fourth quarter and fiscal year results for 2016.  It was also the last conference call led by outgoing  CEO Dave Cote.  Cote, who has been at the helm for over 15 years, left on what I feel was relatively on a muted note in terms of results, but left under the usual jovial attitude with analysts.  Focusing on the company, f ourth quarter earnings came in at $1.74 and sales were $10B.  This was generally in-line with expectations, though sales were slightly under expectations of $10.15B.  That said, the company was able to beat on organic growth, keeping it at down 1% instead of the an...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. On Friday, Honeywell shared their 2017 forecast with the investing community.  The truth of the matter is that the results felt mixed.  In fact, initial headlines of the press release was strongly negative.  The company has reiterated their fourth quarter results for 10% earnings growth and a target of $1.74 for the quarter ($6.53 for the year).  While this was within the range, it was at the low end of the range, which is somewhat disappointing.  Additionally, they lowered sales and earnings expectations for 2017.  Reported sales will be down 1%-2% primarily due to divestitures after gains from acquisitions.  Earnings a...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. OK, before I begin on Honeywell's third quarter call, it's best that I retrace some other events I didn't have a chance to talk about.  About 3 weeks prior to their results, Honeywell released information noting that the third quarter didn't do as well as they had expected and they lowered the top end of their earnings and sales targets for the year.  The market took swift action, hacking off over 8% off of the news.  A lot of this had to do with the fact that it looked like all progress within the company was slowing and things were quickly turning for the worse.  The stock responded so strongly that a couple days later, CEO Dave Cote...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Honeywell announced second quarter earnings results on Friday, posting earnings of $1.66 on sales of $10B.  Earnings were a slight beat on analyst expectations of $1.64 while the sales were slightly under the expectations of $10.13B.  Additionally, the company also raised the lower end of guidance for 2016 to $6.60 and lowered their outlook on sales by about $300M.  Expected earnings now has a range of $6.60 to $6.70 while the sales range is now $40B to $40.3B.  The mixed results were reflected by the stock dropping over 2.5% on trading during the day, though the stock was down close to twice that at one point.  Analysts were expe...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Honeywell reported on their first quarter results for 2015 back on April 22nd.  Earnings were $1.53 on sales of $9.5B.  This beat on both top and bottom line estimates from Analysts of $1.50 and $9.37B.  In addition to beating expectations, Honeywell also raised their lower end of guidance from $6.45 by ten cents, creating a range now of $6.55 - $6.70.  While results and guidance were positive, and generally in line with how management approaches almost every quarter, the results received little fan fare.  I see a few factors to this.  The first is that this is what we've come to expect almost every quarter, though the ten ce...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Honeywell announced their fourth quarter and full year earnings estimates for 2015.  Earnings of $1.58 on sales of $9.98B was perfectly in line with expectations.  The company ended the year earning $6.10 and returned $10B in cash to shareholders through dividends, share buybacks, and mostly (not to mention most importantly) mergers and acquisitions. Free cash flow also increased by 10%, which was more than the management team expected.  Margins also increased by over 2% on the year, which is rather impressive at this point.  You'd have to believe we're reaching a point where those margin gains are reaching the most optimum point, but ...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Last Friday, Honeywell did another bang-up job, delivering the types of quarters I've come to expect.  Earnings were delivered at $1.51, two cents above estimates, while revenues were a healthy beat of $9.8B.  Additionally, the company raised the lower end of it's guidance for 2015 by five cents, putting the range now at $6.05 - $6.15.  While the guidance raise isn't exactly surprising to me, the rate and size of the guidance is starting to indicate that both my guidance, and potentially the high mark of these estimates could be beat due to the "accelerating organic growth" the company is seeing and predicted would continue throughout th...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Honeywell presented their first quarter results on Friday.  While they were able to beat earnings expectations by two cents, coming in at $1.41, they missed revenue expectations, reporting only $9.2B.  Earnings were up in large part due to a 2.2% increase in segment margin. The company raised the lower end of their guidance by five cents, indicating they feel things are continuing to look good, despite the lighter sales.   With a mixed quarter like this, I see some good and some not so good items worth noting.  I'll start with some of the concerns and risks the stock faces.  To start with, they missed on revenues.  January ...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. On Friday, Honeywell announced their fourth quarter and fiscal 2014 annual earnings.  Earnings came in at $1.43 for the quarter, which beat estimates by a penny and revenues were higher than the $10.2B expected, coming in at $10.45B.  Margins grew by 9% and net profit rose 15% verses their results a year ago.  On the year, earnings came in at $5.56, beating consensus and their own high end of the range by a penny (and my estimates by 2 cents).  Revenues also beat the provided range coming in at $40.4B.  This gave EPS a 12% gain compared to 2013.  All exceptionally solid results, showing yet again how this management sets reas...