What's going on?
In a tale of two American industrial conglomerates, $116 billion-valued Honeywell reported sweet second-quarter results on Friday, sending its stock buzzing up. Meanwhile, 126-year-old General Electric (GE)’s results weren’t bright enough to keep its stock from dimming.
What does this mean?
Things are looking good, honey: Honeywell’s sales and profit grew more than expected and it raised its own expectations for the rest of the year – for the third time. Honeywell’s aerospace division was leading the charge, thanks to demand from the airline industry and higher US military spending.
GE also did better than expected: its drop in profit was smaller than anticipated due to cost cutting. But, while Honeywell was revising its expectations up, GE was revising its own down – saying it’s going to generate less cash for the year overall. Despite GE’s aviation division also doing well, this was offset by weakness in its energy business.
Why should I care?
For markets: Investors like Honey.
Investors saw things going well for Honeywell and went for a piece of the comb – the stock rose 4%. GE’s stock, on the other hand, fell by 4% – its shares have halved over the past year. Once the world’s most valuable public company, GE also said that it’s also going to sell fewer large power turbines this year as renewables take over – furthering its energy segment’s troubles.
The bigger picture: Forewarned is forearmed.
Honeywell’s started buying components from countries other than China to avoid getting caught in the crossfire as the US and China butt heads over trade. The company’s also raised some of its prices in anticipation and locked in some purchases ahead of the tariffs coming into effect. It still expects to be hit, but it’s got its raincoat and umbrella to hand to weather the storm as best it can.