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Honeywell: A Long-Term Investment Opportunity In A Dividend Growth Stock
- Honeywell is an excellent combination of good value and a high growth dividend stock.
- Honeywell has shown considerable earnings per share surprise in the last four quarters, and it demonstrated significant improvement in its profitability.
- Honeywell will continue to benefit from its diverse product lines and its strong presence in the commercial aerospace market.
Update: Honeywell Increases Dividend 15%; Reconfirming Thesis
- HON increased the dividend 15% to $2.07 from $1.80 (annual).
- According to Chairman and CEO Dave Cote, they plan to grow dividends faster than earnings, which to me implies a gradual increase of the payout ratio.
- I reconfirm my thesis that the annual dividend in 2018 could be at least $2.89, which represents an increase of 40% from the new annual dividend of $2.07.
- Honeywell has increased dividends per share by 50% since 2010.
- The company has a very low payout ratio of 35% and plenty of room to increase it.
- Consensus EPS estimates for 2018 imply that HON could increase its dividend significantly by then.
- Honeywell slightly beat analyst estimates on both earnings and revenue.
- EPS, gross revenue, and segment margin forecasts are all raised very slightly.
- The improvements confirm my original expectations.
- I predicted improvements in gross margins, citing HON’s ability to efficiently run a conglomerate and the sale of Friction Materials.
- Honeywell beat Q3 estimates for the top and bottom lines.
- The results reinforce my positive outlook on the company.
- I predicted that Honeywell would beat the market over the long term.
Honeywell - A Diversified Potential Long-Term Investment To WatchPine Brook Securities • Mon, Oct. 20
- Honeywell has delivered consistently strong financials quarter after quarter and year after year.
- There has been a build up of cash within the company, acting as a potential catalyst in the short term.
- The company would represent a long-term investment with great potential for significant total returns.
- Honeywell posts strong third quarter results.
- Organic growth and margin expansion drive earnings growth again.
- Despite the solid business performance, appeal is limited at market-equivalent multiples currently.
Why Honeywell's Flat Performance This Year Is An Opportunity
- Honeywell hasn't performed brilliantly in 2014.
- The company's five-year plan looks solid and should reap benefits.
- Honeywell's diversified portfolio and shrewd initiatives should prove to be beneficial in the long-run.
- Honeywell is a buy at present valuation.
Honeywell: A Diversified Growth Idea With Increasing Dividends
- The company’s building environmental and combustion controls and their turbocharger products will benefit from a strong global trend toward energy efficiency.
- The company’s aerospace division will benefit from rising global aircraft fleet sizes, demand for better fuel economy and aftermarket demand.
- The company will continue to reward shareholders with dividend increases and share buybacks.
- Honeywell is an enabler technology conglomerate that serves the world through its inventions. It beat the S&P 500 and Dow Jones Industrial Average over the past five years.
- Honeywell delivered a consistent financial performance in ten years. Its strong presence in emerging markets including China and India is expected to give it long-term growth.
- The consensus target price presents an attractive upside. Investors seeking a stable long-term investment should consider investing in Honeywell.
- Despite a 4% growth in the Industrial Production, Honeywell was able to rake in revenues of $9.7 billion representing an increase of 6%.
- The company is also working on streamlining its business and becoming more centered on “Great Positions in Good Industries”.
- It plans to combine its Transport Systems business with Aerospace in order to exploit the benefits of engineering and technology similarities and the shared business mechanisms.
- The amalgamation is anticipated to elevate the segment’s 2014 margin to 19.5% from 18.2% in the prior year.
- The stock represents an upside potential of approximately 50% and offers a dividend yield of 1.89%.
Buy Honeywell For Its Growing Revenues And Expanding Profit Margin
- Shares in Honeywell currently yield 1.91%, which is low compared to its largest competitor General Electric.
- However, the company has been growing revenues and margins, and expects double digit earnings growth in the next 5 years.
- The balance sheet looks great with close to 9% of the current market cap in cash and equivalents.
- Diversified industrials are gaining momentum with the healing of economy.
- Smart business strategies, efficient management, innovative products, technologies, and services are allowing Honeywell to generate higher double digit growth in earnings.
- Honeywell is offering an attractive entry point.
- Honeywell is a perfect pick for defensive investors with healthy dividends and steady price appreciation.
- GE has a lot of income potential and is highly profitable.
- However, sector peer Honeywell offers better growth prospects and higher levels of profitability.
- GE’s current valuation may be excessive versus Honeywell’s and its shares could fail to keep up with its rival.
Honeywell International: This Stock Is Worth Buying
- Based on its multiple price valuation, Honeywell’s stock is underpriced with potential of 1.87%.
- The company’s Automation and Control Solutions segments will revive their contribution to the company’s overall revenue.
- The next quarter will bring a 4-5% increase in revenue.
- The recent earnings are neither exciting nor discouraging.
- Expecting mid double digit growth is not a good idea at this point.
- Management’s high focus on excellence and five-year growth plan are great positives for long-term investment.
Honeywell - Little Appeal As I Cannot Identify The Next Value Driver
- Honeywell's shares hit fresh high in the wake of solid second quarter results.
- Multi-year plans, organic growth, margin expansion and valuation multiple increase all benefited shares in recent years.
- I wonder what could drive shares higher, not finding the current risk-reward too appealing given the cyclical nature of the business.
Investors In Honeywell Should Pay Attention To Valuation
- Valuation matters and HON looks rich.
- It trades at almost 20 times earnings.
- But it is only growing at about 4%.
Thu, Nov. 13, 10:13 AM| Comment!
Mon, Nov. 10, 7:41 AM
- Honeywell (NYSE:HON) Process Solutions will upgrade controls at two refineries run by Tupras (OTC:TUPRY) as part of a five-year service, maintenance and support contract aimed at improving operations and reducing maintenance costs.
- The contract will improve plant performance while reducing maintenance costs for the refineries' Honeywell control systems by 15-20%.
Tue, Nov. 4, 7:13 AM
- U.S. District Judge Ann Montgomery says Honeywell (NYSE:HON) could begin penalizing workers who refuse to take medical or biometric tests, and denied the Equal Employment Opportunity Commission's request for a temporary restraining order to block the program.
- Employees who decline to take the tests could be fined up to $4K in surcharges and increased health costs.
- Previously: EEOC sues Honeywell over new health screening policy
Fri, Oct. 31, 9:16 AM
- Honeywell's (NYSE:HON) Board of Directors has approved a 15% increase in the company's regular annual cash dividend rate (from $1.80 to $2.07 per common share).
- The increased regular quarterly dividend will be effective starting with the fourth quarter dividend, which was declared today and is payable on December 10, 2014.
- HON +1.4% premarket
Fri, Oct. 31, 9:03 AM
Wed, Oct. 29, 10:42 AM
- The Equal Employment Opportunity Commission is suing Honeywell (HON +0.1%) over a health care policy that requires employees and their spouses to take medical tests or face monetary penalties.
- The lawsuit is seeking a temporary injunction to stop the biometric testing, which can identify smoking, diabetes, high blood pressure, obesity and other health problems.
- The EEOC claims Honeywell's new health screening policy violates the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act, although the company says the screening and wellness program "are in strict compliance with both HIPAA and the Affordable Care Act's guidelines."
Tue, Oct. 21, 10:51 AM
- Honeywell (HON +2.1%) and DuPont (DD +1.4%) were sent a statement of objections by EU regulators for violating antitrust rules over a global refrigerant for car air conditioners.
- "The cooperation they entered into in 2010...may have limited its (the refrigerant's) availability and technical development, in breach of EU antitrust rules," the European Commission said in a statement.
- The car-coolant (R-1234yf) is the only chemical that currently meets new EU standards on greenhouse-gas emissions.
- Responding to the claim, Thierry F.J. Vanlancker, President of DuPont Chemicals & Fluoroproducts, says "DuPont has complied at all times with applicable laws...and we plan to defend vigorously against the Commission's allegations and preliminary conclusions. We will fight this every step of the way, as it has no basis in law or fact."
Mon, Oct. 20, 7:16 AM
- Honeywell's (NYSE:HON) annual forecast of global deliveries estimates as many as 9,450 new business jets valued at about $280B between 2014 and 2024, about $30B and 200 more than predicted a year earlier when it reduced the expected number of deliveries 8% from about 10K.
- The introduction of new models and increased buying activity among fractional jet operators are helping accelerate new deliveries, offsetting steep declines among manufacturers of smaller jets providing “reason for some cautious optimism,” says Brian Sill, Honeywell's president of business and general aviation.
- Still, a full recovery from the global recession (which nearly halved jet deliveries from the 2008 peak of more than 1,300 aircraft) may take some time.
- Last year, the company expected to return to the $22B in jet billings seen at the 2008 peak by 2016, but its latest forecast moves that back another year to 2017. Overall deliveries aren't expected to top 1K again annually until 2023.
- Honeywell, which supplies business-jet manufacturers with everything from advanced avionics to jet engines, expects deliveries of between 650 and 675 new jets, basically flat over 2013’s 678 shipments. The value of those deliveries will outpace the growth in units compared with 2013's estimate, growing the market by 7%-8% to $280B from 2014 to 2024.
Fri, Oct. 17, 9:08 AM
- Honeywell (NYSE:HON) +3.1% premarket after reporting better than expected Q3 earnings and revenues, driven by sales gains in almost all segments and raising the lower end of its outlook for the year.
- HON's automation and control systems business, which supplies the commercial construction industry, added 9% to $3.67B, but aerospace sales were flat at $3.9B.
- Sales of performance materials and technologies rose 7% to $2.52B, while transportation systems sales fell 10% because of the sale of the friction materials segment this summer.
- issues new guidance for FY 2014: Raises EPS to $5.50-$5.55 from $5.45-$5.55 vs. $5.54 analyst consensus estimate, revenues to $40.3B-$40.4B from $40.2B-$40.4B vs. $40.$B consensus, segment margin to ~17% from 16.8%-17%.
- "Looking ahead to 2015, we’re once again planning for a slow growth macro environment but expect to continue delivering strong earnings growth," CEO Dave Cote says.
Fri, Oct. 17, 7:02 AM| Comment!
Thu, Oct. 16, 5:30 PM
Tue, Sep. 30, 6:52 PM
- The FAA orders Boeing (NYSE:BA) to replace pilot displays on more than 1,300 jets, including some of the newest 737 models, to prevent possible interference from Wi-Fi devices used in cockpits.
- The final safety directive aims to ensure that essential information such as airspeed, altitude and heading does not temporarily disappear from certain instrument displays manufactured by Honeywell (NYSE:HON).
- The new directive applies to nearly 10x the number of planes covered under an FAA proposal last fall; U.S. airlines will have five years to swap out the displays on Boeing 777 and 737 models.
Mon, Sep. 29, 10:21 AM
- Tata Power's defense engineering unit has signed an agreement with Honeywell (HON -0.6%) to produce the company's TALIN (Tactical Advanced Land Inertial Navigator) navigator in India.
- TALIN gives precision navigation for vehicles and artillery movement, even where GPS satellite guidance is limited.
- Honeywell will license the design and hardware to assemble and build the production kits for the navigation system in India, giving a boost to New Delhi's efforts to encourage local defense manufacturing.
Tue, Sep. 16, 2:47 PM
- Honeywell (HON +0.3%) and its suppliers plan to spend $900M in coming years for research and development and to expand capacity to increase production of more environmentally friendly refrigerants, insulation materials, solvents and aerosols.
- HON says it has spent nearly $350M so far for efforts to create products to reduce greenhouse gas emissions, reduce energy consumption and meet proposed tighter U.S. environmental regulations and plans to spend $550M more to support the new products.
- The proposal includes a planned $300M plant at its Geismar, La., operation that was unveiled late last year, which will produce a more environmentally friendly refrigerant for automobiles and is expected to fully operational in 2016.
Tue, Aug. 26, 7:19 AM
- The lockout of 135 union employees at Honeywell's (NYSE:HON) uranium conversion plant in Illinois looks like it will extend past a month as the two sides negotiate on issues such as subcontractors, pay, healthcare benefits and work rules.
- The plant converts uranium oxide into uranium hexafluoride, which is then enriched to be used as fuel in nuclear power plants. Honeywell is continuing to operate the plant with the remaining employees who are non-union.
- The company says it is committed to bargaining in good faith, but is concerned about the plant's competitiveness. The facility accrued $300M in operating losses over the past 10 years and is just starting to break even.
Tue, Aug. 19, 10:27 AM
- Honeywell's (HON -0.3%) subsidiary, UOP, has been selected by BW Offshore to remove contaminants from natural gas aboard a new floating production, storage and offloading vessel off the coast of Scotland.
- UOP is continually innovating to create lightweight, compact, chemical-free equipment that is ideal for the complex offshore gas environment," says SVP Rebecca Liebert.
- The vessel, will be leased to Premier Oil (OTCPK:PMOIY), and will include a UOP Separex Membrane System which cleans natural gas streams by removing carbon dioxide and water vapor.
HON vs. ETF Alternatives
Honeywell International, Inc. is a technology & manufacturing company, which serves customers with aerospace products & services, control, sensing and security technologies for buildings, homes and industry, turbochargers, automotive products, chemicals.
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