Honeywell (HON) is trading at a new all-time high after the company reported strong fourth quarter results and guided Q1 and fiscal 2018 EPS above consensus this morning.
Fourth quarter headline results look ‘in-line', but the company had preannounced upside results in December. Fourth quarter EPS came in at $1.85 vs. original guidance of $1.79-1.84; sales grew 8.6% vs. original guidance for 5-7% growth. Organic sales grew 6%, at the high end of its original guidance range. Fourth aerospace sales were up 5% organically due to robust commercial aftermarket demand and U.S. defense growth.
The company guided first quarter EPS above estimates. Honeywell also guided fiscal 2018 EPS up 9-13% to $7.75-8.00 with sales up 3-5%, or 2-4% organically, versus 4% growth in 2017. Before tax reform was passed, Honeywell guided for fiscal 2018 EPS of $7.55-7.80. Honeywell now expects an effective tax rate of 22-23% this year.
The company plans to return cash to shareholders and be acquisitive with the windfall.
Honeywell also said the spin-off of the home and transportation businesses remains on track.Chief executive "Honeywell's transformation to a software-industrial leader is well underway, and in 2018, we expect to complete the spin-offs of our Homes and Global Distribution business, and our Transportation Systems business, which will position Honeywell for future growth and margin expansion."
The stock has been in a very strong uptrend, up ~35% since breaking out to a new all-time high one year ago. It trades at just over 20x 2018 earnings estimates, roughly in-line with other conglomerates and the industrials sector.