Honeywell International Inc.

HON Details

Honeywell International Inc. (NASDAQ: HON) is a software-industrial-focused technology solutions provider. Its operating segment are 1) Aerospace, offers aircraft-related products, software, and services to OEMs and other clients in a number of industries, 2) Honeywell Building Technologies, makes products, software, solutions, and technologies that assist building owners and occupiers 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:

• HON’s FMS Selected by Airbus: On May 19, 2022, Airbus chose HON's Flight Management System (FMS) to address the air traffic management demands of the future A320, A330, and A350 aircraft. Airlines will achieve best-in-class operating efficiency, dependability, and safety with the new FMS. The new FMS also includes connectivity with the outside world, such as Electronic Flight Bags (EFB), to reduce pilot workload and improve fuel efficiency by utilizing real-time data.
• Quarterly Dividend: On April 25, 2022, the company declared a quarterly dividend of USD 0.98 per common share, payable on June 03, 2022, to shareholders of record on May 13, 2022.

Q1FY22 Results:

• Flat Topline: The company reported YoY decline of 0.92% in total revenue to USD 8.38 billion in Q1FY22 (ended March 31, 2022) from USD 8.45 billion in Q1FY21, attributable to 4.32% decline in Product sales.
• Decline in Profitability: HONs reported an decrease in net income to USD 1.13 billion during Q1FY22 vs. USD 1.43 billion in Q1FY21.
• Cash and Debt Position: As of March 31, 2022, the company had cash & cash equivalents (including short-term investments) of USD 9.77 billion and total debt of USD 19.37 billion.
  

Key Risk:

• Risk Associated with International Operations: Because HON generates most of its revenue outside of the United States, any change in the economic, political, or regulatory climate could hurt its bottom line.

Outlook:

Q2FY22 and FY22 Guidance (Source: Earnings Presentation, Q1FY22, April 29, 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 18.23% 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 208.32.

Considering the correction in the stock price, solid margins, positive outlook, associated risks, and current valuation. We recommend a "Hold" rating on the stock at the current price of USD 186.28, down 3.31% as of May 20, 2022, at 11:31 AM PDT.

Three-Year Technical Price Chart (as of May 20, 2022, at 11:31 AM PDT). 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.