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Honeywell (HON) to Boost Product Portfolio With CAES Buyout
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Honeywell International Inc. (HON - Free Report) has inked a deal to acquire CAES Systems Holdings LLC (“CAES”) from private equity firm Advent International for about $1.9 billion in cash. The transaction will augment HON's defense technology offerings across various domains, including land, sea, air and space.
Based in Arlington, VA, CAES is engaged in offering RF, microwave and millimeter wave solutions for missile defense radars, missile seekers and electronic warfare systems. The company has 13 facilities in North America.
Acquisition Rationale
The latest buyout is in sync with Honeywell’s policy of acquiring businesses to expand its market share and customer base. The inclusion of CAES’ expertise in scalable solutions with the company’s defense and space portfolio will enable HON to boost its established production. It will also help Honeywell expand its positions in critical platforms like F-35, EA-18G, AMRAAM and GMLRS as well as new technologies such as Navy Radar (SPY-6), unmanned aerial systems (“UAS”) and counter-UAS technologies. The acquisition will expand the company’s aerospace business.
Subject to regulatory approvals and customary closing conditions, the acquisition is expected to close by the second half of 2024. This transaction is not subject to any financing conditions. The company expects the buyout to be cash-earnings per share accretive in the first full year of possession.
Acquisitions are an essential aspect of Honeywell's growth strategy. In June 2024, the company acquired Carrier’s Global Access Solutions business for an all-cash deal of $4.95 billion. The inclusion of Global Access Solutions’ expertise in advanced access and security solutions, coupled with its impressive growth and margin profile, will enable Honeywell to expand its security products portfolio and boost its building automation segment.
The acquisition of SCADAfence, in August 2023, expanded the company’s OT cybersecurity portfolio in Tel Aviv, Israel, while simultaneously fortifying its existing capabilities in cybersecurity. SCADAfence has been integrated into the Honeywell Forge Cybersecurity+ suite within Honeywell Connected Enterprise.
Zacks Rank and Price Performance
Honeywell currently carries a Zacks Rank #2 (Buy). The stock has risen 6.9% in the past year compared with the industry’s 15.2% growth.
Image Source: Zacks Investment Research
Strength in the commercial aviation, building automation and UOP businesses augurs well for Honeywell. A strong commercial aftermarket and solid commercial aviation demand led by strength in the air transport aftermarket are aiding the Aerospace segment.
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Griffon Corporation (GFF - Free Report) presently sports a Zacks Rank of 1. It delivered a trailing four-quarter average earnings surprise of 33.5%, on average.
In the past 60 days, the Zacks Consensus Estimate for GFF’s 2024 earnings has increased 10.6%. The stock has risen 71.4% in the past year.
ITT Inc. (ITT - Free Report) currently carries a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 6.5%.
In the past 60 days, the consensus estimate for ITT’s 2024 earnings has inched up 0.9%. Shares of ITT have gained 48.8% in the past year.
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Honeywell (HON) to Boost Product Portfolio With CAES Buyout
Honeywell International Inc. (HON - Free Report) has inked a deal to acquire CAES Systems Holdings LLC (“CAES”) from private equity firm Advent International for about $1.9 billion in cash. The transaction will augment HON's defense technology offerings across various domains, including land, sea, air and space.
Based in Arlington, VA, CAES is engaged in offering RF, microwave and millimeter wave solutions for missile defense radars, missile seekers and electronic warfare systems. The company has 13 facilities in North America.
Acquisition Rationale
The latest buyout is in sync with Honeywell’s policy of acquiring businesses to expand its market share and customer base. The inclusion of CAES’ expertise in scalable solutions with the company’s defense and space portfolio will enable HON to boost its established production. It will also help Honeywell expand its positions in critical platforms like F-35, EA-18G, AMRAAM and GMLRS as well as new technologies such as Navy Radar (SPY-6), unmanned aerial systems (“UAS”) and counter-UAS technologies. The acquisition will expand the company’s aerospace business.
Subject to regulatory approvals and customary closing conditions, the acquisition is expected to close by the second half of 2024. This transaction is not subject to any financing conditions. The company expects the buyout to be cash-earnings per share accretive in the first full year of possession.
Acquisitions are an essential aspect of Honeywell's growth strategy. In June 2024, the company acquired Carrier’s Global Access Solutions business for an all-cash deal of $4.95 billion. The inclusion of Global Access Solutions’ expertise in advanced access and security solutions, coupled with its impressive growth and margin profile, will enable Honeywell to expand its security products portfolio and boost its building automation segment.
The acquisition of SCADAfence, in August 2023, expanded the company’s OT cybersecurity portfolio in Tel Aviv, Israel, while simultaneously fortifying its existing capabilities in cybersecurity. SCADAfence has been integrated into the Honeywell Forge Cybersecurity+ suite within Honeywell Connected Enterprise.
Zacks Rank and Price Performance
Honeywell currently carries a Zacks Rank #2 (Buy). The stock has risen 6.9% in the past year compared with the industry’s 15.2% growth.
Image Source: Zacks Investment Research
Strength in the commercial aviation, building automation and UOP businesses augurs well for Honeywell. A strong commercial aftermarket and solid commercial aviation demand led by strength in the air transport aftermarket are aiding the Aerospace segment.
Other Stocks to Consider
Some other top-ranked companies from the Conglomerates sector are discussed below:
Carlisle Companies Incorporated (CSL - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 17%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CSL’s 2024 earnings has increased 6.5% in the past 60 days. Shares of Carlisle have gained 74.4% in the past year.
Griffon Corporation (GFF - Free Report) presently sports a Zacks Rank of 1. It delivered a trailing four-quarter average earnings surprise of 33.5%, on average.
In the past 60 days, the Zacks Consensus Estimate for GFF’s 2024 earnings has increased 10.6%. The stock has risen 71.4% in the past year.
ITT Inc. (ITT - Free Report) currently carries a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 6.5%.
In the past 60 days, the consensus estimate for ITT’s 2024 earnings has inched up 0.9%. Shares of ITT have gained 48.8% in the past year.