Honeywell shares jump on strong earnings. Here is Jim Cramer’s advice on the stock
Honeywell reported positive first-quarter results before the opening bell on Tuesday, sending shares up nearly 4% in premarket trading. Revenue in the three months ended March 31 rose 7.9% year over year to $9.82 billion, topping expectations of $9.59 billion, according to LSEG. Adjusted earnings per share (EPS) totaled $2.51, exceeding estimates of $2.21, LSEG data showed. On an annual basis, adjusted EPS increased 7.3%. The results exceeded management’s guidance across all metrics. That includes organic sales growth of 4% — well ahead of its flat-to-2% growth range — and flat segment margin compared with guidance of a modest decline. Overall, the quarter looks solid and we’ll have more to say later this morning with comments taken from the conference call — and we’ll update this story later with what we hear. But with the stock up so much in premarket trading, Jim Cramer is suggesting some caution. Although the results look good and this was Honeywell’s first step in the right direction, Jim is concerned that these early stock gains may not hold. It’s possible that, in this tariff-filled environment, what executives have to say about the second half of the year on the conference call could be more subdued. Plus, our discipline is never to chase a stock when it’s up this much in a single session to begin with. HON YTD mountain Honeywell’s year-to-date stock performance. Honeywell’s first quarter was highlighted by 9% organic revenue growth in its aerospace technologies segment; 8% growth in building automation, and smaller-than-expected organic sales declines in industrial automation, as well as its energy and sustainability solutions business. Orders increased 3% organically, led by aerospace and building automation, and the company’s backlog closed the quarter at $36.1 billion, up 8% year over year. As for guidance, management left its outlook mostly unchanged – which is a win in our book considering the several downward revisions they have made over the past few years. The company took $100 million off the high end of its sales guidance range and trimmed the top end of its segment margin range. But on adjusted earnings, the company increased the low end of its outlook from $10.10 to $10.20 and raised the midpoint of its guide to $10.35 from $10.30. The $10.50 top end of the range was unchanged. Importantly, the company backed into guidance the impact of tariffs and some “identified demand risk” in the second half of the year due to global uncertainty. Meanwhile, second-quarter earnings guidance was above Wall Street estimates, while its sales forecast was a light versus consensus. (Jim Cramer’s Charitable Trust is long HON. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
An aircraft engine is being tested at Honeywell Aerospace in Phoenix.
Alwyn Scott | Reuters
Honeywell reported positive first-quarter results before the opening bell on Tuesday, sending shares up nearly 4% in premarket trading.