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Club holdings Honeywell and Dover are looking better and better since their quarterly earnings reports last month. The chief financial officers of both industrial companies delivered encouraging business updates on Tuesday at a Bank of America conference — convenient timing for investors seeking answers on what the U.S. and China lowering tariffs on each other means for their firms. When Honeywell and Dover reported in late April, triple-digit tariff rates and the economic uncertainty stemming from trade tensions were the dominant theme. A lot has changed in a little bit of time. Here’s an overview of what each management team spoke about, along with our take on their remarks. HON YTD mountain Honeywell International (HON) year-to-date performance Honeywell lowered its estimated tariff exposure now that the U.S. and China temporarily agreed to slash their duty rates on each other’s goods while a larger trade deal is hashed out. CFO Mike Stepniak said the new figure is around $400 million — $100 million lower than what it provided alongside quarterly earnings on April 29. However, Stepniak said Honeywell expects the net impact — taking into account its planned strides to offset the tariffs — will remain at zero. Stepniak also said he was “quite confident” in the Honeywell’s ability to hit their fiscal guidance as well, adding that orders have been overall “strong again” in April and into May. “The only hesitation or pause is the demand piece in the second half of the year, specifically in the businesses that have more exposure to China, and how that’s going to play out from a tariffs standpoint,” Stepniak added. Honeywell has already taken steps to curb risks from higher levies, according to Stepniak. “We’re offsetting with price escalations and other actions as far as our supply chain,” Stepniak said. The company has made small “tweaks to their manufacturing footprint over the past three months [too],” he added, describing those adjustments as “surgical.” Some parts of Honeywell’s portfolio continue to flourish despite uncertainty. Stepniak pointed to Honeywell’s building automation business as one area that is performing well this month. The division is home to sales of things like HVAC control systems, fire safety products and security solutions. “We can see green shoots in Europe as far as short-cycle demand. China has been good for us, too. China is not a big revenue driver for us. It’s about 5%, but China demand is there. So, we’re seeing that,” the CFO said. Bottom line It’s great to hear Honeywell anticipates a lower tariff exposure than originally forecasted. However, it’s not thesis changing, given the company seems confident in its ability to ensure the net impact stays at zero. As Stepniak mentioned, strategic price hikes are a big one. But Honeywell has also shifted its supply chain around a “local for local” strategy for over 20 years, which helps minimize its tariff exposure more generally, too. This is especially true for its building automation business. Plus, management has taken a more prudent approach to guidance in the past two quarters, putting Honeywell in a better spot to over-deliver. DOV YTD mountain Dover (DOV) year-to-date performance Dover CFO Chris Woenker also explained exactly how the industrial company can weather higher levies. For starters, Dover has an advantage since much of its manufacturing footprint is in North America. “We are in a situation where our supply chains are manageable. We have a competitive position that gives us an opportunity to make sure we can manage [these] things,” said Woenker, who took over as CFO in January. Dover also derives a large part of its sales domestically. Around 46% of its revenues were from the U.S. last year, according to Dover’s 2024 annual report , and its China exposure is small. On Tuesday, management said China is 5% of its revenue base and 6% of its cost base. This means that Dover can bypass some tariffs risks such as higher costs, which could result in price increases that soften demand. Woenker said Dover has incrementally moved some of its production and supply chain to the U.S. Plus, executives said efforts to reshore a product line made in China by year-end are continuing. “There is some activity that was actually underway even before the acceleration of some of the tariff conversation over the past several months,” Woenker said. Unlike Honeywell, Dover did not change its estimates for the financial impact from tariffs. During the company’s April 24 quarterly earnings report, executives said they anticipated an incremental annualized tariff headwind of $215 million, with about $175 million tied to China. The company also lowered its full-year guidance to protect against a potential tariff-driven slowdown. With the tariff drama aside, Woenker pointed to a bright spot in Dover’s portfolio — its biopharma business, which sells pumps and other laboratories devices. He described it as a “tailwind” for the company and expects it to be a “double-digit growth business for us going forward into the future, multi years into the future.” Bottom line Dover’s exposure to tariffs haven’t been a huge concern for us, given a lot of the conglomerate’s supply chain is in North America. It’s also not surprising that Dover did not alter its tariff impact estimates because its management team has shown itself to be conservative — similar to Honeywell’s reformed approach to guidance. That means there should be some upside to Dover’s guidance if the uncertainty resolves and trade negotiations progress positively. We also liked what Woenker had to say about its biopharma business. It’s an especially attractive area for the company’s portfolio and a reason why we like the stock. Other key reasons, though, include Dover’s capacity to reshape its business portfolio to focus on faster-growing, higher-margin areas, along with its exposure to lucrative trends such as the data center buildout due to the company’s thermal connectors and heat exchangers. (Jim Cramer’s Charitable Trust is long HON, DOV. 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 . 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A close-up look at one of Dover Corp.’s metal quick disconnects used for data center server cooling.
Courtesy: Dover Corp.
Club holdings Honeywell and Dover are looking better and better since their quarterly earnings reports last month.
