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Honeywell (HON) Rides on Aerospace Business Strength Amid Risks
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Honeywell International Inc. (HON - Free Report) has been benefiting from strength in its commercial aviation aftermarket and original equipment businesses driven by solid demand in the air transport and business aviation markets. Also, strength in its defense and space business owing to stable U.S. and international defense spend volumes has been proving beneficial for its Aerospace segment.
Solid demand for building solutions and high backlog levels will likely be beneficial for the company’s Building Technologies segment. Strength in advanced materials, process solutions, HPS and UOP businesses bodes well for the Performance Materials and Technologies segment. For 2024, it anticipates overall revenues in the $38.1-$38.9 billion band, with organic revenues expected to increase 4-6% year over year.
Honeywell has been strengthening its business through acquisitions. In December 2023, HON inked a deal to acquire Carrier’s Global Access Solutions business for an all-cash deal of $4.95 billion. This acquisition positions the company to become a leading provider of security solutions for the digital age.
Also, in June 2023, the company acquired Compressor Controls Corporation from INDICOR, LLC. The buyout fortifies HON’s expertise in industrial control, automation and process solutions. It’s worth noting that acquisitions had a positive impact of 1% on the Performance Materials and Technologies segment’s sales growth in the fourth quarter of 2023.
It has been committed to rewarding shareholders through dividend payouts and share repurchases. For instance, in 2023, it paid dividends of $2.86 billion and repurchased shares worth $3.72 billion. It announced a hike of 5% in its quarterly dividend rate in September 2023.
Image Source: Zacks Investment Research
In the past six months, the Zacks Rank #3 (Hold) company has gained 4.5% against the industry’s decline of 1.2%.
Despite the positives, a low demand environment across its warehouse and workflow solutions, and productivity solutions and services businesses owing to softness in the warehouse automation market has been affecting the Safety and Productivity Solutions segment's performance. Also, headwinds across sensing and safety technologies business remain concerning.
The escalating costs and operating expenses have also been major headwinds for the company. For instance, its total cost of sales (cost of products and services) in 2023 totaled approximately $23 billion, representing an increase of 2.9% year over year. It has been facing inflationary impacts across wages and other line items. High costs and expenses, if not controlled, might adversely impact its margins and profitability.
GFF delivered a trailing four-quarter average earnings surprise of 42%. In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 3.9%.
Flowserve Corporation (FLS - Free Report) presently has a Zacks Rank of 2. FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has remained steady.
Tetra Tech Inc. (TTEK - Free Report) presently has a Zacks Rank of 2. TTEK delivered a trailing four-quarter average earnings surprise of 14.4%. In the past 60 days, the Zacks Consensus Estimate for Tetra Tech’s 2024 earnings has increased 2.9%.
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Honeywell (HON) Rides on Aerospace Business Strength Amid Risks
Honeywell International Inc. (HON - Free Report) has been benefiting from strength in its commercial aviation aftermarket and original equipment businesses driven by solid demand in the air transport and business aviation markets. Also, strength in its defense and space business owing to stable U.S. and international defense spend volumes has been proving beneficial for its Aerospace segment.
Solid demand for building solutions and high backlog levels will likely be beneficial for the company’s Building Technologies segment. Strength in advanced materials, process solutions, HPS and UOP businesses bodes well for the Performance Materials and Technologies segment. For 2024, it anticipates overall revenues in the $38.1-$38.9 billion band, with organic revenues expected to increase 4-6% year over year.
Honeywell has been strengthening its business through acquisitions. In December 2023, HON inked a deal to acquire Carrier’s Global Access Solutions business for an all-cash deal of $4.95 billion. This acquisition positions the company to become a leading provider of security solutions for the digital age.
Also, in June 2023, the company acquired Compressor Controls Corporation from INDICOR, LLC. The buyout fortifies HON’s expertise in industrial control, automation and process solutions. It’s worth noting that acquisitions had a positive impact of 1% on the Performance Materials and Technologies segment’s sales growth in the fourth quarter of 2023.
It has been committed to rewarding shareholders through dividend payouts and share repurchases. For instance, in 2023, it paid dividends of $2.86 billion and repurchased shares worth $3.72 billion. It announced a hike of 5% in its quarterly dividend rate in September 2023.
Image Source: Zacks Investment Research
In the past six months, the Zacks Rank #3 (Hold) company has gained 4.5% against the industry’s decline of 1.2%.
Despite the positives, a low demand environment across its warehouse and workflow solutions, and productivity solutions and services businesses owing to softness in the warehouse automation market has been affecting the Safety and Productivity Solutions segment's performance. Also, headwinds across sensing and safety technologies business remain concerning.
The escalating costs and operating expenses have also been major headwinds for the company. For instance, its total cost of sales (cost of products and services) in 2023 totaled approximately $23 billion, representing an increase of 2.9% year over year. It has been facing inflationary impacts across wages and other line items. High costs and expenses, if not controlled, might adversely impact its margins and profitability.
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Griffon Corporation (GFF - Free Report) presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GFF delivered a trailing four-quarter average earnings surprise of 42%. In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 3.9%.
Flowserve Corporation (FLS - Free Report) presently has a Zacks Rank of 2. FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has remained steady.
Tetra Tech Inc. (TTEK - Free Report) presently has a Zacks Rank of 2. TTEK delivered a trailing four-quarter average earnings surprise of 14.4%. In the past 60 days, the Zacks Consensus Estimate for Tetra Tech’s 2024 earnings has increased 2.9%.