Yahoo Finance Honeywell (HON) to Gain From Business Strength Amid Risks
Honeywell International Inc. HON has been witnessing solid momentum in its commercial aviation original equipment and aftermarket businesses, driven by solid demand in the aviation market. Strength in the company’s defense and space business, supported by stable U.S. and international defense spend volumes, have been driving its Aerospace segment. Also, solid demand for building solutions and a robust backlog level have been driving its Building Automation segment. Exiting the first quarter, its overall backlog grew 6% year over year to $32 billion.
For 2024, it anticipates overall revenues of $38.5-$39.3 billion, with organic revenues expected to rise 4-6% from the year-ago reported level.
Management remains focused on acquiring businesses to gain access to new customers, regions and product lines. In June 2024, the company acquired Carrier’s Global Access Solutions business for an all-cash deal of $4.95 billion. This acquisition positions HON to become a leading provider of security solutions for the digital age.
Also, in March 2024, it announced its intention to acquire Civitanavi Systems S.p.A. for about $217 million to boost its portfolio of aerospace navigation solutions. In the first quarter of 2024, buyouts boosted the Industrial Automation segment’s sales by 1%.
HON remains committed on rewarding shareholders through dividend payouts and share buybacks. For instance, in the first quarter of 2024, it paid out dividends of $703 million and repurchased shares worth $671 million. Also, the quarterly dividend rate was hiked by 5% in September 2023.
Image Source: Zacks Investment Research
In the past six months, the Zacks Rank #3 (Hold) company’s shares have gained 3.6% against the industry’s decline of 2%.
Despite the positives, softness across its warehouse and workflow solutions, and productivity solutions and services businesses has been hurting the Industrial Automation segment's performance. In first-quarter 2024, the segment’s sales declined 12% on a year-over-year basis.
Also, high debt levels remain a major concern for the company. For instance, Honeywell exited the first quarter with long-term debt of $22.2 billion, up from $16.6 billion at 2023-end. Interest expenses and other financial charges in the quarter remained high at $220 million. Notably, the increase in its debt level was primarily attributable to the fund raised for the Carrier acquisition.
Key Picks
Some better-ranked stocks from the same space are discussed below.
Carlisle Companies Incorporated CSL presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 17%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CSL’s 2024 earnings has increased 6.5% in the past 60 days. Shares of Carlisle have gained 32.7% in the past six months.
Griffon Corporation GFF currently flaunts a Zacks Rank of 1. It delivered a trailing four-quarter average earnings surprise of 33.5%.
In the past 60 days, the consensus estimate for GFF’s 2024 earnings has increased 10.6%. The stock has risen 13.7% in the past six months.
ITT Inc. ITT presently carries a Zacks Rank #2 (Buy). It delivered a trailing four-quarter average earnings surprise of 6.5%.
In the past 60 days, the consensus estimate for ITT’s 2024 earnings has inched up 1%. Shares of ITT have jumped 9.9% in the past six months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Honeywell International Inc. (HON) : Free Stock Analysis Report
ITT Inc. (ITT) : Free Stock Analysis Report
Carlisle Companies Incorporated (CSL) : Free Stock Analysis Report
Griffon Corporation (GFF) : Free Stock Analysis Report
