Honeywell International Inc.

HON Details

Honeywell International Inc. (NASDAQ: HON) is a technology solutions provider with a software-industrial focus. Its operating segment are 1) Aerospace, which distributes aircraft-related products, software, and services to original equipment manufacturers (OEMs) and other clients in a variety of end markets, 2) Honeywell Building Technologies, which provides building owners and occupiers with products, software, solutions, and technologies that help them keep their buildings safe, energy-efficient, sustainable, and productive, 3) Performance Materials and Technologies develops and manufactures performance chemicals, materials, process technologies, and automation systems and 4) Safety and Productivity Solutions segment offers products and software that improve customers' productivity, workplace safety, and asset performance.

Latest News:

• Strengthening Sustainability Commitments: On April 13, 2022, HON announced a new set of sustainability promises that go beyond its existing pledge to become carbon neutral in its facilities and activities by 2035. The new commitments include working with the Science-Based Targets initiative (SBTi) to produce a science-based target providing scope 3 emissions and participation in the US Department of Energy's Better Climate Challenge. In addition, the firm is a supporter of the Paris Climate Agreement.

FY21 Results:

• Growth in Topline: The company reported YoY growth of 5.38% in total revenue to USD 34.39 billion in FY21 (ended December 31, 2021) from USD 32.64 billion in FY20, attributable to 3.66% growth in Product sales.
• Improvement in Profitability: HON’s reported an increase in net income to USD 5.61 billion during FY21 vs. USD 4.87 billion in FY20.
• Cash and Debt Position: As of December 31, 2021, the company had cash & cash equivalents (including short-term investments) of USD 11.52 billion and total debt of USD 19.56 billion.

 Key Risk:

• Risk Associated with International Operations: HON derives majority of its revenue from outside the US, therefore any change in the economic, political and regulatory environment could harm its financials.

Outlook:

FY22 Guidance (Source: Earnings Presentation, FY21, February 03, 2022)

Valuation Methodology: Price/Earnings Per Share Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

HON's stock price has fallen 15.32% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 174.42 to USD 236.86. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 217.34.

Considering the correction in the stock price, improvement in fundamentals, positive outlook, associated risks, and current valuation. We recommend a "Hold" rating on the stock at the closing price of USD 196.34, down 0.44% as of April 20, 2022.

Three-Year Technical Price Chart (April 19, 2022). Source: REFINITIV, Analysis by Kalkine Group

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: All forecasted figures and industry information have been taken from REFINITIV.  

Note 3: The report publishing date is as per the Pacific Time Zone.

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