How The Buy Side Expects Honeywell To Report Friday

| About: Honeywell International, (HON)

Honeywell International (NYSE:HON) is set to report FQ4 2013 earnings before the market opens on Friday, January 24. Honeywell is an over 100 year old American multinational company that invents and manufactures different technologies in consumer products, engineering services and aerospace systems. To the average person however, they are perhaps most well known for their home thermostats. Here's how the buy-side expects Honeywell to report Friday.

The information below is derived from data submitted to the platform by a set of Buy Side and Independent analyst contributors.

(Click Here to see All Estimates for Honeywell)

The current Wall Street consensus expectation is for Honeywell to report $1.22 EPS and $10.199B revenue while the current consensus from 10 Buy Side and Independent contributing analysts is $1.23 EPS and $10.171B revenue. This quarter the buy-side as represented by the community is expecting Honeywell to beat the Wall Street consensus on both profit, but come up short on revenue.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a smaller differential between the two groups' forecasts.

Through the past two years Honeywell has established a great track record of beating the Wall Street consensus on profit. Over the past eight quarters Honeywell has beaten the Street's forecast every time.

On the revenue side Honeywell has been a lot less predictable, and the analysts on seem to have noticed. Throughout the past two years Honeywell has missed the Wall Street consensus on revenue five out of eight times.

Over the previous six quarters the consensus has been more accurate than Wall Street in predicting HON's EPS and revenue four and three times, respectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The distribution of estimates published by analysts on Estimize range from $1.22 to $1.25 EPS and $10.040B to $10.239B in revenues. This quarter we're seeing a large distribution of estimates compared to previous quarters.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A larger distribution of estimates signaling the potential for greater volatility post earnings, or smaller vice versa.

This quarter the Wall Street profit consensus has edged higher from $1.21 to $1.22 EPS while the revenue forecast has fallen from $10.214B to $10.199B. Meanwhile the Estimize EPS consensus has returned to its starting point of $1.23 and the Estimize revenue consensus has recently fallen from a high of $10.191B to $10.171B. Timeliness is correlated with accuracy, and a decrease in the community consensus going into the report is often a bearish indicator.

The analyst with the highest estimate confidence rating this quarter is danvk who projects $1.25 EPS and $10.049B in revenue. In the Winter 2014 season, danvk is currently ranked as the second best analyst and is ranked 49th overall among over 3,500 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. danvk agrees with the Estimize community that Honeywell will beat the Street on profit and miss on revenue, but danvk projects that consensus out to a much higher magnitude.

Disclosure: None.