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Honeywell's Rocky Research Buyout to Boost Aerospace Business

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Honeywell International Inc. (HON - Free Report) yesterday announced that it acquired Boulder City, NV-based technology firm Rocky Research. The financial terms of the transaction have not been disclosed.

It is worth noting here that Honeywell’s share price increased 2.8% yesterday, ending the trading session at $171.55.

Inside the Headlines

Rocky Research is a privately held company, focusing on providing solutions related to energy, thermal and power management. Its customer base includes the U.S. Department of Defense and Homeland Security.

With the buyout, Rocky Research will be a wholly-owned subsidiary of Honeywell, while its headquarters at Boulder City will be used by Honeywell as a research and development facility. Also, its facility in Huntsville, AL, will serve as an integration and testing center for the acquirer.

The solutions provided by Rocky Research as well as its expertise in research and development will enhance growth scopes for Honeywell’s existing offerings in the energy storage, power and thermal management, and power generation arenas. In all, the buyout will assist Honeywell to deliver a complete range of products and services — including prototyping, demonstration, product delivery, support and others — to its customers.

It is worth noting here that Rocky Research will be part of Honeywell’s Aerospace segment. The division engages in providing integrated avionics, engines, systems and service solutions for aircraft manufacturers, airlines, business and general aviation, military, space, and airport operations. The segment’s revenues in second-quarter 2020 were $2,543 million, representing 34% of total revenues generated by Honeywell.

Honeywell’s Buyout Activities

The company believes in acquiring businesses to improve its product lines and market exposure. Apart from Rocky Research, the company did not make any other acquisitions so far in 2020.

However, the company invested $50 million for acquisitions in 2019. It added Rebellion Photonics to its portfolio in December, while acquired TruTrak Flight Systems in July. Since the buyout, Rebellion Photonics has been augmenting its portfolio of automation, process technologies and gas detection solutions. TruTrak Flight Systems enhanced the value of Honeywell’s aviation business.

Zacks Rank, Estimate Trend and Price Performance

With a market capitalization of $117.1 billion, Honeywell currently carries a Zacks Rank #4 (Sell). The company’s businesses, especially commercial original equipment, commercial aftermarket and performance materials, are severely impacted by downturns caused by the pandemic. However, strength in defense and safety as well as Intelligrated businesses is a boon.

In the past three months, the company’s shares have gained 21.3% compared with the industry’s growth of 14.2%.




 

Meanwhile, the Zacks Consensus Estimate for its earnings has been decreased by 2% to $1.48 for the third quarter of 2020 and by 0.3% to $6.90 for 2020 in the past 60 days. However, the consensus estimate for 2021 has been stable at $7.70 during the same timeframe.

Honeywell International Inc. Price and Consensus

 

Honeywell International Inc. Price and Consensus

Honeywell International Inc. price-consensus-chart | Honeywell International Inc. Quote

Stocks That Warrants a Look

Three better-ranked stocks in the industry are HC2 Holdings, Inc. , Icahn Enterprises L.P. (IEP - Free Report) and Raven Industries, Inc. . All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 60 days, bottom-line estimates for these companies have improved for the current year. Further, earnings surprise for the last reported quarter was 166.67% for HC2 Holdings, 402.22% for Icahn and 212.5% for Raven.

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