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Honeywell Shows Promise with On-Going Growth Initiatives
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On Aug 29, Zacks Investment Research updated the research report on leading diversified operations provider Honeywell International Inc. (HON - Free Report) .
Headquartered in Morris Township, NJ, Honeywell is a global diversified technology and manufacturing company with a wide range of aerospace products and services, control, sensing and security technologies for buildings, homes and industry. The company also manufactures turbochargers, automotive products, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals, and energy-efficient products and solutions for homes, business and transportation.
On Aug 23, 2016, the U.S. Army signed a contract with the Advanced Turbine Engine Company (“ATEC”) to undergo a design review of its fleet of Black Hawk and Apache helicopters. The two-year contract for an undisclosed amount is an integral part of the Army's Improved Turbine Engine program that encourages the development of affordable engines without compromising on quality. The ATEC is a joint venture forged in 2006 between two industry stalwarts namely, Honeywell and Pratt & Whitney, a division of United Technologies Corporation . The joint venture aims to design state-of-the-art engines like HPW3000 that seek to either match or excel the aggressive performance goals of the U.S. Army. The development schedule for the engine program of the U.S. Army intends to select from competing preliminary engine designs in 2018 and then proceed with a single engine developer.
Honeywell unveiled plans to spin off its $1.3 billion resins and chemicals business into a standalone, publicly traded company called AdvanSix. This move came two months after it backed out of a $90 billion blockbuster bid to buy rival giant United Technologies Corp. after facing resistance from the target, antitrust regulators and key clients. Post spin-off, the new company will be a leading producer of Nylon 6, a polymer resin used to produce engineered plastics, filaments, fibers and films that are used in products such as automotive and electronic components, and also in food and industrial packaging.
Recently, the company also announced that it is realigning the ACS business segment into two new segments – Home and Building Technologies and Safety and Productivity Solutions, effective third quarter. The separation into two entities will improve efficiency and accelerate decision-making, as well as lead to a more complete integrated suite of technologies for the relevant end markets.
The company announced the acquisition of Elster - a leading provider of thermal gas solutions for commercial, industrial and residential heating systems, and gas, water and electricity meters for $5 billion. Infrastructure investments and increasing gas consumption in high growth regions like India and China are expected to drive demand for Elster’s gas heating assets, strengthening its existing gas combustion portfolio to create a full solution offering. The company has $300 million in its fund for its restructuring initiatives to improve its overall cost position and drive further margin expansion, going forward.
However, the company’s proactive restructuring initiatives have positioned it to navigate better than many of its peers, but it is yet to witness signs of stabilization in a number of its major end markets. A change in the U.S. government’s defense and aerospace funding could also adversely impact sales of Aerospace’s defense and space-related products and services. The high research and development costs could also be a drag on the Aerospace segment margin and affect its profitability.
Given its international presence, the company often faces unfavorable foreign currency movements, impacting its top-line growth. Any slowdown in the global economy, particularly after the Brexit referendum or in the manufacturing industry as a whole will have an adverse impact on its business, hampering its long-term growth potential. A geopolitical impasse due to various conflicts and disruptions may further affect its international operations in key markets. In order to fend competition, Honeywell has to continually develop and maintain competitive products by adding innovative features that differentiate its products and prevent commoditization. These increase R&D expenditure and have often resulted in margin contraction and reduced bottom-line growth.
Honeywell currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the same space include Barloworld Ltd. (BRRAY - Free Report) and Crane Co. (CR - Free Report) , both carrying a Zacks Rank #2 (Buy).
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Honeywell Shows Promise with On-Going Growth Initiatives
On Aug 29, Zacks Investment Research updated the research report on leading diversified operations provider Honeywell International Inc. (HON - Free Report) .
Headquartered in Morris Township, NJ, Honeywell is a global diversified technology and manufacturing company with a wide range of aerospace products and services, control, sensing and security technologies for buildings, homes and industry. The company also manufactures turbochargers, automotive products, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals, and energy-efficient products and solutions for homes, business and transportation.
On Aug 23, 2016, the U.S. Army signed a contract with the Advanced Turbine Engine Company (“ATEC”) to undergo a design review of its fleet of Black Hawk and Apache helicopters. The two-year contract for an undisclosed amount is an integral part of the Army's Improved Turbine Engine program that encourages the development of affordable engines without compromising on quality. The ATEC is a joint venture forged in 2006 between two industry stalwarts namely, Honeywell and Pratt & Whitney, a division of United Technologies Corporation . The joint venture aims to design state-of-the-art engines like HPW3000 that seek to either match or excel the aggressive performance goals of the U.S. Army. The development schedule for the engine program of the U.S. Army intends to select from competing preliminary engine designs in 2018 and then proceed with a single engine developer.
Honeywell unveiled plans to spin off its $1.3 billion resins and chemicals business into a standalone, publicly traded company called AdvanSix. This move came two months after it backed out of a $90 billion blockbuster bid to buy rival giant United Technologies Corp. after facing resistance from the target, antitrust regulators and key clients. Post spin-off, the new company will be a leading producer of Nylon 6, a polymer resin used to produce engineered plastics, filaments, fibers and films that are used in products such as automotive and electronic components, and also in food and industrial packaging.
Recently, the company also announced that it is realigning the ACS business segment into two new segments – Home and Building Technologies and Safety and Productivity Solutions, effective third quarter. The separation into two entities will improve efficiency and accelerate decision-making, as well as lead to a more complete integrated suite of technologies for the relevant end markets.
The company announced the acquisition of Elster - a leading provider of thermal gas solutions for commercial, industrial and residential heating systems, and gas, water and electricity meters for $5 billion. Infrastructure investments and increasing gas consumption in high growth regions like India and China are expected to drive demand for Elster’s gas heating assets, strengthening its existing gas combustion portfolio to create a full solution offering. The company has $300 million in its fund for its restructuring initiatives to improve its overall cost position and drive further margin expansion, going forward.
However, the company’s proactive restructuring initiatives have positioned it to navigate better than many of its peers, but it is yet to witness signs of stabilization in a number of its major end markets. A change in the U.S. government’s defense and aerospace funding could also adversely impact sales of Aerospace’s defense and space-related products and services. The high research and development costs could also be a drag on the Aerospace segment margin and affect its profitability.
Given its international presence, the company often faces unfavorable foreign currency movements, impacting its top-line growth. Any slowdown in the global economy, particularly after the Brexit referendum or in the manufacturing industry as a whole will have an adverse impact on its business, hampering its long-term growth potential. A geopolitical impasse due to various conflicts and disruptions may further affect its international operations in key markets. In order to fend competition, Honeywell has to continually develop and maintain competitive products by adding innovative features that differentiate its products and prevent commoditization. These increase R&D expenditure and have often resulted in margin contraction and reduced bottom-line growth.
Honeywell currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the same space include Barloworld Ltd. (BRRAY - Free Report) and Crane Co. (CR - Free Report) , both carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>