economy
We're downgrading Honeywell Aerospace after a shockingly bad earnings debut
The company slashed its full-year guidance on key metrics in its first earnings report since separating from the Honeywell conglomerate in June.
TL;DR
- Honeywell Aerospace's stock dropped significantly after its first quarterly report post-separation.
- The company missed revenue and earnings estimates and cut its full-year guidance.
- Supply chain issues are hindering output and preventing the company from meeting all orders, despite strong demand.
- CEO Jim Currier admitted to underestimating the time required to fix supply chain problems.
- The company's Electronic Solutions segment saw sales growth, but profit declined due to unfavorable mix and higher costs.
- Sales for Engines and Power Systems grew slightly, but profits fell sharply due to rising costs.
- Control Systems segment sales and profits increased.
- The company has revised its full-year organic sales growth forecast to 4%-5% and adjusted EBIT to $4.35-$4.45 billion.
- Management's credibility has been questioned due to the significant reduction in guidance.
- The author suggests selling the stock due to the loss of confidence in management's ability to execute.