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There Is More Honey Trapped in Honeywell

January 26, 2014 | About:

Investors always expect a good return from a company because it is their hard earned money. Each and every company tries their level best to satisfy their customers as well as valued investors. Honeywell International Inc. (NYSE:HON) is a Fortune 100 diversified technology and manufacturing company, which serves customers with aerospace products & services, control, sensing and security technologies for buildings, homes and industry, turbochargers, automotive products, chemicals. This global conglomerate combines innovative R&D to bring high-quality products to markets.

Positive Numbers

Honeywell International had a very strong 4 years. In its fourth quarter 2013 (reported on Jan. 24, 2014.), the company reported net income of $947 million versus $251 million in the year-ago quarter. Increased sales improved the company’s earnings. Adjusted earnings stood at $1.24 per share reported in the quarter versus $1.10 in the year-ago quarter. For fiscal 2013, the company reported net income of $3,924 million and adjusted earnings stood at $4.97 per share versus $2,926 million and $4.48 per share respectively in the year-ago quarter. Revenues in fourth quarter 2013 increased 8.0% year over year to $10,387 million. As of Dec 31, 2013, Cash and cash equivalents and Cash flow from operating activities were $6.4 billion and $4,355 billion respectively.

The company assured its investors a good prospect as results in all the departments are positive.

Aerospace segment sales increased 3% year over year in the reported quarter to $3,099 million, primarily driven by Commercial growth and increase in Defense and Space. Automation and Control Solutions segment sales were up 10% year over year in the reported quarter to $4,576 million. Increase in numbers is mainly due to growth in energy, safety, and security, favorable impact of acquisitions, and strength in Americas Distribution business. Performance Materials and Technologies segment sales increased 12% during the quarter to $1.7 billion due to favorable impact of the acquisition of Thomas Russell, and improved production volumes in Advanced Materials. Transportation Systems segment revenues of $978 million for the quarter increased 16% year over year due to continued growth from new platform launches, higher global turbo gas penetration and light vehicle production, and an increase in China commercial vehicle demand.

Forward Outlook

Based on the momentum from the fourth quarter, Honeywell is increasingly confident in 2014. The company provided sales guidance for 2014 in the range of $40.3–$40.7 billion. It also gave EPS guidance in the range of $5.35 to $5.55. Free cash flow is expected to be in the range of $3.8 billion–$4.0 billion.

Graphs from Honeywell.com

On Jan.7, Honeywell announced the sales of its friction materials business, which makes brake pads, to Federal-Mogul Corp. (NASDAQ:FDML) for $155 million. The company’s transportation systems division will get a boost from this deal. Further, to support critical infrastructure improvement at the industrial facility, with an aim to save energy, Honeywell and the U.S. army recently announced a $61 million infrastructure improvement project at the Rock Island Arsenal Joint Manufacturing Technology Center (JMTC). The project will be completed by the first half of 2017.

Honeywell is benefiting from rising oil and gas investments worldwide that are driving demand for materials, equipment, and services. Honeywell CEO Dave Cote said that the benefits from smart gain deployment actions position the company for strong earnings growth and outperformance over the next 5 years.

To Wrap Things Up

Over the past three and a half years the revenue growth has increased by 14.62%, while the assets have increased by 17.37%. The net income over the past three and a half to four years, have increased by 59.64%, the ROE has increased from 18.96% to 21.58% in the same time period. The company's assets have increased by 6.572 billion, while the liabilities have increased by $2.279 billion. All these prove that Honeywell is performing well and this performance will be continued in the near future. I am pretty bullish that this great company won’t let its investors down.

Rating: 4.3/5 (7 votes)


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