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.

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.

Kalkine Media Limited, an affiliate of Kalkine Limited, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.