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Key Reasons to Hold on to Honeywell (HON) Stock for Now
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Honeywell International (HON - Free Report) is benefiting from strength in commercial aerospace due to strong commercial aftermarket demand despite weakness in the Safety and Productivity Solutions segment due to lower warehouse, and workflow and productivity solutions volumes.
Let’s delve deeper to unearth the factors that are aiding this Zacks Rank #3 (Hold) company.
Business Strength: Strong commercial aftermarket demand owing to a recovery in commercial flight hours is aiding Honeywell’s Aerospace segment. With improvement in supply chains and strength in the order book, the company expects organic sales to increase in low double digits for the Aerospace segment in 2023. Strength in process solutions and UOP operations is fueling growth of the Performance Materials and Technologies (PMT) segment.
Growth in smart energy, projects and lifecycle solutions and services within process solutions and robust demand for petrochemical and refining catalysts within UOP are expected to drive the segment’s performance. The company expects high-single-digit organic growth for the unit in 2023.
Honeywell’s bullish guidance for 2023 holds promise. For 2023, the company expects sales of $36.7-$37.3 billion compared with $36.5-$37.3 billion anticipated earlier. The company expects organic sales growth of 4-6% in the year compared with 3-6% estimated earlier. Honeywell expects adjusted earnings per share of $9.05-$9.25, suggesting a year-over-year rise of 3-6%.
Expansion Initiatives: Honeywell has been strengthening its business through acquisitions. Recently, the company completed the acquisition of Compressor Controls Corporation from INDICOR, LLC. The acquisition fortifies HON’s expertise in industrial control, automation and process solutions while simultaneously bolstering its sustainability portfolio with new carbon capture control solutions. The acquired entity is part of HON’s Process Solutions business within PMT.
In July, Honeywell entered into a deal to acquire SCADAfence, a provider of operational technology (OT) and Internet of Things cybersecurity solutions. The acquisition will expand Honeywell's OT cybersecurity portfolio in Tel Aviv, Israel, while simultaneously fortifying its existing capabilities in cybersecurity, offering customers enhanced security, reliability and efficiency.
SCADAfence will be integrated into the Honeywell Forge Cybersecurity+ suite within Honeywell Connected Enterprise. The acquisition is expected to close in the second half of 2023. In June, HON inked a deal to acquire the heads-up-display assets of Saab Technology, a Swedish aerospace and defense company. The acquisition, which is subject to customary closing conditions, will boost Honeywell’s end-to-end avionics and safety offerings.
Rewards to Shareholders: Strong cash flows allow Honeywell to effectively deploy capital for repurchasing shares and paying out dividends. In the second quarter, free cash flow was $1.13 billion compared with $843 million in the year-ago period. The company expects free cash flow of $3.9-$4.3 billion for 2023. Given its strong cash flow generation capacity, HON rewarded its shareholders with $1.42 billion in dividends and $1.18 billion in share repurchases in the first six months of 2023. In September 2023, HON hiked its dividend by approximately 5% to $1.08 per share (annually: $4.32). This marks the 14th consecutive dividend hike since 2010.
Key Picks
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Graham has an estimated earnings growth rate of 400% for the current fiscal year. The stock has rallied around 68% so far this year.
Applied Industrial Technologies (AIT - Free Report) currently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 15%, on average.
Applied Industrial has an estimated earnings growth rate of 3.1% for the current fiscal year. The stock has gained 22.7% in the year-to-date period.
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Key Reasons to Hold on to Honeywell (HON) Stock for Now
Honeywell International (HON - Free Report) is benefiting from strength in commercial aerospace due to strong commercial aftermarket demand despite weakness in the Safety and Productivity Solutions segment due to lower warehouse, and workflow and productivity solutions volumes.
Let’s delve deeper to unearth the factors that are aiding this Zacks Rank #3 (Hold) company.
Business Strength: Strong commercial aftermarket demand owing to a recovery in commercial flight hours is aiding Honeywell’s Aerospace segment. With improvement in supply chains and strength in the order book, the company expects organic sales to increase in low double digits for the Aerospace segment in 2023. Strength in process solutions and UOP operations is fueling growth of the Performance Materials and Technologies (PMT) segment.
Growth in smart energy, projects and lifecycle solutions and services within process solutions and robust demand for petrochemical and refining catalysts within UOP are expected to drive the segment’s performance. The company expects high-single-digit organic growth for the unit in 2023.
Honeywell International Inc. Price and Consensus
Honeywell International Inc. price-consensus-chart | Honeywell International Inc. Quote
Honeywell’s bullish guidance for 2023 holds promise. For 2023, the company expects sales of $36.7-$37.3 billion compared with $36.5-$37.3 billion anticipated earlier. The company expects organic sales growth of 4-6% in the year compared with 3-6% estimated earlier. Honeywell expects adjusted earnings per share of $9.05-$9.25, suggesting a year-over-year rise of 3-6%.
Expansion Initiatives: Honeywell has been strengthening its business through acquisitions. Recently, the company completed the acquisition of Compressor Controls Corporation from INDICOR, LLC. The acquisition fortifies HON’s expertise in industrial control, automation and process solutions while simultaneously bolstering its sustainability portfolio with new carbon capture control solutions. The acquired entity is part of HON’s Process Solutions business within PMT.
In July, Honeywell entered into a deal to acquire SCADAfence, a provider of operational technology (OT) and Internet of Things cybersecurity solutions. The acquisition will expand Honeywell's OT cybersecurity portfolio in Tel Aviv, Israel, while simultaneously fortifying its existing capabilities in cybersecurity, offering customers enhanced security, reliability and efficiency.
SCADAfence will be integrated into the Honeywell Forge Cybersecurity+ suite within Honeywell Connected Enterprise. The acquisition is expected to close in the second half of 2023. In June, HON inked a deal to acquire the heads-up-display assets of Saab Technology, a Swedish aerospace and defense company. The acquisition, which is subject to customary closing conditions, will boost Honeywell’s end-to-end avionics and safety offerings.
Rewards to Shareholders: Strong cash flows allow Honeywell to effectively deploy capital for repurchasing shares and paying out dividends. In the second quarter, free cash flow was $1.13 billion compared with $843 million in the year-ago period. The company expects free cash flow of $3.9-$4.3 billion for 2023. Given its strong cash flow generation capacity, HON rewarded its shareholders with $1.42 billion in dividends and $1.18 billion in share repurchases in the first six months of 2023. In September 2023, HON hiked its dividend by approximately 5% to $1.08 per share (annually: $4.32). This marks the 14th consecutive dividend hike since 2010.
Key Picks
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Graham Corporation (GHM - Free Report) currently flaunts a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 243.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
Graham has an estimated earnings growth rate of 400% for the current fiscal year. The stock has rallied around 68% so far this year.
Applied Industrial Technologies (AIT - Free Report) currently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 15%, on average.
Applied Industrial has an estimated earnings growth rate of 3.1% for the current fiscal year. The stock has gained 22.7% in the year-to-date period.