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Here's Why Hold Strategy is Apt for Honeywell Stock Right Now
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Honeywell International Inc. (HON - Free Report) is benefiting from strength in its commercial aviation original equipment and aftermarket businesses, as strength in air travel continues. Pickup in air travel has been a positive as the increased usage of aircraft spurs spending on parts and products that the company provides. Strength in its defense and space business, supported by stable U.S. and international defense spend volumes, has also been driving its Aerospace segment’s performance. For 2024, it expects organic sales in the Aerospace segment to be up in the low double digits.
Solid demand for its building products and solutions, led by increasing building projects, will likely be beneficial for the Building Automation segment. For 2024, it anticipates that the segment’s organic sales will grow in the low single digits with strong margin performance. For 2024, HON expects overall revenues to be in the $39.1-$39.7 billion range while organic revenues expected to be up 5-6% on a year-over-year basis.
The company intends to strengthen and expand its businesses through acquisitions. In September 2024, Honeywell acquired CAES Systems from private equity firm Advent. The transaction will augment its defense technology offerings across various domains, including land, sea, air and space. In June 2024, it acquired Carrier’s Global Access Solutions business for an all-cash deal of $4.95 billion. This acquisition will position HON to become a leading provider of security solutions for the digital age.
Also, in July 2024, the company inked a deal to acquire Air Products’ liquefied natural gas process technology and equipment business for $1.81 billion in cash. Subject to customary closing conditions, the acquisition is expected to close before the end of 2024.
HON remains committed to rewarding shareholders through dividend payouts and share buybacks. For instance, in the first half of 2024, it paid out dividends of $1.4 billion and repurchased shares worth $1.2 billion. Also, the quarterly dividend rate was hiked by 5% in September 2023.
HON Stock’s Price Performance
Image Source: Zacks Investment Research
In the past year, the Zacks Rank #3 (Hold) company’s shares have gained 10.7% compared with the industry’s 9.2% growth.
However, the company has been witnessing weakness in the warehouse and workflow solutions businesses due to lower demand for projects, which has been affecting the Industrial Automation segment's performance. Also, the weakened demand for personal protective equipment within the sensing and safety technologies business is worrisome. In second-quarter 2024, the Industrial Automation segment’s sales declined 8% on a year-over-year basis.
Also, high debt levels remain a major concern for the company. For instance, Honeywell exited the second quarter with long-term debt of $20.9 billion, higher than $16.6 billion at 2023-end. Also, interest expenses and other financial charges in the quarter remained high at $250 million.
Key Picks
Some better-ranked stocks from the same space are discussed below.
VGR delivered a trailing four-quarter average earnings surprise of 15.4%. In the past 60 days, the Zacks Consensus Estimate for Vector Group’s 2024 earnings has increased 5.2%.
Federal Signal Corporation (FSS - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 12.3%.
In the past 60 days, the Zacks Consensus Estimate for FSS’ 2024 earnings has increased 2.9%.
Carlisle Companies Incorporated (CSL - Free Report) currently carries a Zacks Rank of 2. CSL delivered a trailing four-quarter average earnings surprise of 16.3%.
In the past 60 days, the consensus estimate for CSL’s 2024 earnings has increased 1.7%.
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Here's Why Hold Strategy is Apt for Honeywell Stock Right Now
Honeywell International Inc. (HON - Free Report) is benefiting from strength in its commercial aviation original equipment and aftermarket businesses, as strength in air travel continues. Pickup in air travel has been a positive as the increased usage of aircraft spurs spending on parts and products that the company provides. Strength in its defense and space business, supported by stable U.S. and international defense spend volumes, has also been driving its Aerospace segment’s performance. For 2024, it expects organic sales in the Aerospace segment to be up in the low double digits.
Solid demand for its building products and solutions, led by increasing building projects, will likely be beneficial for the Building Automation segment. For 2024, it anticipates that the segment’s organic sales will grow in the low single digits with strong margin performance. For 2024, HON expects overall revenues to be in the $39.1-$39.7 billion range while organic revenues expected to be up 5-6% on a year-over-year basis.
The company intends to strengthen and expand its businesses through acquisitions. In September 2024, Honeywell acquired CAES Systems from private equity firm Advent. The transaction will augment its defense technology offerings across various domains, including land, sea, air and space. In June 2024, it acquired Carrier’s Global Access Solutions business for an all-cash deal of $4.95 billion. This acquisition will position HON to become a leading provider of security solutions for the digital age.
Also, in July 2024, the company inked a deal to acquire Air Products’ liquefied natural gas process technology and equipment business for $1.81 billion in cash. Subject to customary closing conditions, the acquisition is expected to close before the end of 2024.
HON remains committed to rewarding shareholders through dividend payouts and share buybacks. For instance, in the first half of 2024, it paid out dividends of $1.4 billion and repurchased shares worth $1.2 billion. Also, the quarterly dividend rate was hiked by 5% in September 2023.
HON Stock’s Price Performance
Image Source: Zacks Investment Research
In the past year, the Zacks Rank #3 (Hold) company’s shares have gained 10.7% compared with the industry’s 9.2% growth.
However, the company has been witnessing weakness in the warehouse and workflow solutions businesses due to lower demand for projects, which has been affecting the Industrial Automation segment's performance. Also, the weakened demand for personal protective equipment within the sensing and safety technologies business is worrisome. In second-quarter 2024, the Industrial Automation segment’s sales declined 8% on a year-over-year basis.
Also, high debt levels remain a major concern for the company. For instance, Honeywell exited the second quarter with long-term debt of $20.9 billion, higher than $16.6 billion at 2023-end. Also, interest expenses and other financial charges in the quarter remained high at $250 million.
Key Picks
Some better-ranked stocks from the same space are discussed below.
Vector Group Ltd. (VGR - Free Report) currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
VGR delivered a trailing four-quarter average earnings surprise of 15.4%. In the past 60 days, the Zacks Consensus Estimate for Vector Group’s 2024 earnings has increased 5.2%.
Federal Signal Corporation (FSS - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 12.3%.
In the past 60 days, the Zacks Consensus Estimate for FSS’ 2024 earnings has increased 2.9%.
Carlisle Companies Incorporated (CSL - Free Report) currently carries a Zacks Rank of 2. CSL delivered a trailing four-quarter average earnings surprise of 16.3%.
In the past 60 days, the consensus estimate for CSL’s 2024 earnings has increased 1.7%.