HON - Embedded Expectations Analysis - 2019 03 06
Honeywell International Inc. (HON:USA) currently trades above historical averages relative to UAFRS-based (Uniform) Earnings, with a 25.3x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about their organic sales growth across businesses, the Transnorm acquisition, and the demand for gas and aftermarket products.Specifically, management may be exaggerating opportunities for margin expansion, and may lack confidence in their ability to sustain organic growth in their Aerospace, Commercial Original Equipment, and Performance and Material Technologies businesses. Moreover, they may be concerned about stranded costs, the sustainability of share repurchases, and the potential of their Transnorm acquisition. Furthermore, they may be exaggerating their balance sheet flexibility, the demand for gas products, and the holiday-related growth in retail footwear. Finally, management may be concerned about Honeywell Building Technologies' exposure to nonresidential construction, and their ability to continue driving aftermarket aircraft demand.
Honeywell International is a technology and manufacturing company. The company has four segments: Aerospace, which supplies products, software and services for aircrafts; Honeywell Building Technologies, which provides products, software, solutions and technologies including building control and optimization, energy management, access control, video surveillance, fire products, and remote patient monitoring systems; Performance Materials and Technologies, which develops and manufactures chemicals and materials, process technologies and automation solutions; and Safety and Productivity Solutions, which provides products and software that improve productivity, workplace safety and asset performance.
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