On Friday, the company reported third-quarter earnings of $1.60 per share, up from $1.47 a year ago and beating the consensus estimate of $1.55. But revenue of $9.61 billion fell from $10.11 billion last year and missed estimates of $9.85 billion.
For the full year, S&P Capital IQ Equity Research forecasts revenue will decline 3% based in part on weak U.S. defense sales and currency headwinds. Its analysts also note additional weakness in the global economy could negatively impact the stock.
On Aug. 21, HON stock broke down from a bull market that had lasted more than four years. As with many stocks, the Aug. 24 low appeared to be a short-term low and perhaps even a bottom.
However, on a rebound, HON stock failed to successfully challenge its 200-day moving average, falling below $92. A subsequent rally failed again to successfully challenge the 200-day moving average at $102.
HON stock closed 1.5% lower on very high volume following Friday’s earnings announcement. The current pattern is that of a bearish “horn.”Traders should sell HON stock short at $99 with a target of $85 for a potential gain of 14%. A stop-loss order should be entered at $104.
If you hold shares short through Honeywell’s ex-dividend date, expected in mid-November, you will be required to pay the dividend to the owner of the stock. The company pays a quarterly dividend of 51 cents per share for a current forward annual yield of 2.1%. Also, check with your broker for any unusual restrictions on shorting this or any other stock.
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