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Here's Why Hold Strategy is Apt for Honeywell (HON) Now
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Honeywell International (HON - Free Report) is backed by multiple tailwinds despite supply-chain constraints and raw material cost inflation hurting its operations. Strong demand environment, orders and backlog levels are supporting its growth. The company’s consistent measures to reward shareholders through dividends and share buybacks are encouraging.
Strong growth in commercial aviation, building products, productivity solutions and services, advanced sensing technologies, advanced materials and recurring connected software businesses is aiding Honeywell. Pricing actions and cost control measures are driving the company’s bottom line. The company expects third-quarter sales to increase 7-11% on an organic basis. Adjusted earnings per share are estimated to be $2.10-$2.20 in the third quarter, reflecting an increase of 4-9% year over year.
Strong segmental performances are driving the company’s top line (up roughly 2% year over year in the second quarter of 2022). Recovery in commercial flight hours is aiding the company’s Aerospace segment. Honeywell anticipates Aerospace sales to increase mid-single digits year over year in 2022. Commercial actions and strength in building products and building solutions are supporting growth of the Building Technologies segment. Orders and backlogs remain strong in the segment. The company expects improved volumes and pricing actions to drive growth of the segment in the second half of 2022. It expects double-digit organic growth for the segment in 2022. Strength in process solutions business and advanced materials business bodes well for the Performance Materials and Technologies segment. The company expects sales for the segment to increase in high single digits for the current year. Honeywell expects adjusted earnings per share to increase 6-9% year over year in the current year. It anticipates organic growth of 5-7% for the current year.
Strong cash flows allow Honeywell to effectively deploy capital for making acquisitions, repurchasing shares and paying out dividends. In the first half of 2022, the company rewarded shareholders with $2.4 billion through share repurchases and $1.4 billion through dividend payments. For 2022, the company expects to buy back shares worth $4 billion. For 2022, the company expects free cash flow of $4.70-$5.10 billion. The quarterly dividend rate was hiked 5.4% in October 2021, marking its 12th increment since 2010. Such diligent capital deployment strategies boost shareholders' wealth.
Honeywell has been steadily strengthening its business through acquisitions. In January 2022, Honeywell acquired Tempe, AZ-based U.S. Digital Designs. The buyout has enhanced its product offerings for improving public safety communications. The company’s acquisition of Performix (September 2021) has strengthened its advanced portfolio of automation solutions, including enterprise quality management software and Experion Process Knowledge System. Its acquisition of Sparta Systems (April 2021) strengthened its position in the digital transformation, industrial automation and enterprise performance management solutions space. The company made several acquisitions in 2020 as well, including Sine Group and Ballard Unmanned Systems.
In light of the abovementioned positives, we believe investors should retain this Zacks Rank #3 (Hold) stock in their portfolio for now.
The Zacks Consensus Estimate for HON’s 2022 earnings has been revised upward by 2 cents in the past 60 days. The gradual easing of supply-chain constraints and increase in industrial production should foster growth of the company going forward.
Key Picks
Some better-ranked stocks within the Conglomerates sector are as follows:
Carlisle Companies (CSL - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for CSL’s 2022 earnings has been revised upward by 14.7% in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks.
Carlisle has an estimated earnings growth rate of 114.4% for the current year. Shares of CSL have rallied 27% in the past six months.
Icahn Enterprises (IEP - Free Report) presently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for IEP’s 2022 earnings has been revised upward by more than 100% in the past 60 days.
Icahn Enterprises has an estimated earnings growth rate of 144.4% for the current year. Shares of IEP have gained 5% in the past six months.
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Here's Why Hold Strategy is Apt for Honeywell (HON) Now
Honeywell International (HON - Free Report) is backed by multiple tailwinds despite supply-chain constraints and raw material cost inflation hurting its operations. Strong demand environment, orders and backlog levels are supporting its growth. The company’s consistent measures to reward shareholders through dividends and share buybacks are encouraging.
Strong growth in commercial aviation, building products, productivity solutions and services, advanced sensing technologies, advanced materials and recurring connected software businesses is aiding Honeywell. Pricing actions and cost control measures are driving the company’s bottom line. The company expects third-quarter sales to increase 7-11% on an organic basis. Adjusted earnings per share are estimated to be $2.10-$2.20 in the third quarter, reflecting an increase of 4-9% year over year.
Strong segmental performances are driving the company’s top line (up roughly 2% year over year in the second quarter of 2022). Recovery in commercial flight hours is aiding the company’s Aerospace segment. Honeywell anticipates Aerospace sales to increase mid-single digits year over year in 2022. Commercial actions and strength in building products and building solutions are supporting growth of the Building Technologies segment. Orders and backlogs remain strong in the segment. The company expects improved volumes and pricing actions to drive growth of the segment in the second half of 2022. It expects double-digit organic growth for the segment in 2022. Strength in process solutions business and advanced materials business bodes well for the Performance Materials and Technologies segment. The company expects sales for the segment to increase in high single digits for the current year. Honeywell expects adjusted earnings per share to increase 6-9% year over year in the current year. It anticipates organic growth of 5-7% for the current year.
Honeywell International Inc. Price and Consensus
Honeywell International Inc. price-consensus-chart | Honeywell International Inc. Quote
Strong cash flows allow Honeywell to effectively deploy capital for making acquisitions, repurchasing shares and paying out dividends. In the first half of 2022, the company rewarded shareholders with $2.4 billion through share repurchases and $1.4 billion through dividend payments. For 2022, the company expects to buy back shares worth $4 billion. For 2022, the company expects free cash flow of $4.70-$5.10 billion. The quarterly dividend rate was hiked 5.4% in October 2021, marking its 12th increment since 2010. Such diligent capital deployment strategies boost shareholders' wealth.
Honeywell has been steadily strengthening its business through acquisitions. In January 2022, Honeywell acquired Tempe, AZ-based U.S. Digital Designs. The buyout has enhanced its product offerings for improving public safety communications. The company’s acquisition of Performix (September 2021) has strengthened its advanced portfolio of automation solutions, including enterprise quality management software and Experion Process Knowledge System. Its acquisition of Sparta Systems (April 2021) strengthened its position in the digital transformation, industrial automation and enterprise performance management solutions space. The company made several acquisitions in 2020 as well, including Sine Group and Ballard Unmanned Systems.
In light of the abovementioned positives, we believe investors should retain this Zacks Rank #3 (Hold) stock in their portfolio for now.
The Zacks Consensus Estimate for HON’s 2022 earnings has been revised upward by 2 cents in the past 60 days. The gradual easing of supply-chain constraints and increase in industrial production should foster growth of the company going forward.
Key Picks
Some better-ranked stocks within the Conglomerates sector are as follows:
Carlisle Companies (CSL - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for CSL’s 2022 earnings has been revised upward by 14.7% in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks.
Carlisle has an estimated earnings growth rate of 114.4% for the current year. Shares of CSL have rallied 27% in the past six months.
Icahn Enterprises (IEP - Free Report) presently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for IEP’s 2022 earnings has been revised upward by more than 100% in the past 60 days.
Icahn Enterprises has an estimated earnings growth rate of 144.4% for the current year. Shares of IEP have gained 5% in the past six months.