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Honeywell (HON) Gains But Lags Market: What You Should Know

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Honeywell (HON - Free Report) closed at $173.20 in the latest trading session, marking a +0.17% move from the prior day. The stock lagged the S&P 500's daily gain of 0.41%. At the same time, the Dow added 0.39%, and the tech-heavy Nasdaq gained 0.57%.

Heading into today, shares of the industrial conglomerate had gained 2.08% over the past month, outpacing the Conglomerates sector's loss of 1.15% and the S&P 500's gain of 0.1% in that time.

Investors will be hoping for strength from HON as it approaches its next earnings release. In that report, analysts expect HON to post earnings of $2.08 per share. This would mark a year-over-year decline of 1.89%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $9.36 billion, down 14.28% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.10 per share and revenue of $37.17 billion. These totals would mark changes of +1.12% and -11.08%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for HON. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.04% higher within the past month. HON currently has a Zacks Rank of #2 (Buy).

Investors should also note HON's current valuation metrics, including its Forward P/E ratio of 21.33. For comparison, its industry has an average Forward P/E of 16.57, which means HON is trading at a premium to the group.

It is also worth noting that HON currently has a PEG ratio of 2.31. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Diversified Operations was holding an average PEG ratio of 1.78 at yesterday's closing price.

The Diversified Operations industry is part of the Conglomerates sector. This industry currently has a Zacks Industry Rank of 87, which puts it in the top 34% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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