After struggling in most parts of 2014, Honeywell (HON, Financial) is finally gathering pace as the company declared solid quarterly results last months. The company had failed to satisfy estimates in the previous quarters, however it stepped up this time and shared a great quarter.
The company’s third quarter revenue came in at $10.11 billion, marking an increase of almost 5% and beating the consensus target of $10.06 billion. On the earnings front, Honeywell shared EPS of $1.47, also up 5% as compared to the corresponding quarter of FY 2013, and beat the analysts’ estimate of $1.41.
The stock jumped following the solid quarterly report, however the good news doesn’t end there as the company also said that it will increase its annual cash dividend by 15%, from $1.80 to $2.07 per share. Honeywell’s CEO, David Cote, said:
“Our five-year plan reflects a balanced capital allocation strategy that includes strategic M&A, opportunistic share buybacks and dividends which grow faster than our earnings. We're very proud of our ability to generate the strong earnings and cash growth required to increase our dividend for the tenth time since 2005 and are confident in Honeywell's ability to outperform in the future."
The company’s focus on long-term term will reward investors in the years to come. Let’s take a look at the company’s prospects.
Bright Future
Honeywell is taking a shot at shrewd business techniques to settle on proficient vital choices. Its greatly talked about five year arrange (2014-2018) looks exceptionally engaging and ought to help it become astonishingly later on. Talking in detail, Honeywell's five-year arrangement concentrates on the accompanying focuses.
. A concentrate on high development regions, which are relied upon to drive half of Honeywell's development throughout the following five years.
2. HOS Gold, the following venture in the advancement of the Honeywell Operating System, to drive remarkable execution through persistent methodology changes.
3. The Honeywell User Experience (HUE), preference concentrated on fundamentally enhancing the client encounter through arrangements that are simpler to utilize, more profitable and more effective.
4. A strengthened concentrate on sublime software advancement for more productive and more strong technology.
5. Viable cash deployment through interest in our businesses, dividend development, and key M&a.
The appealing five-year arrangement looks achievable considering the solid advancement report of Honeywell. The organization has been conveying quick prototyping and other outline standards, which will prompt speedier cycle timing, subsequently permitting it to accomplish client faithfulness and backing. The organization is additionally wanting to grow in China. On the over of such activities, it expects natural income development from $7 billion-$12 billion to $46 billion-$51 billion by 2018.
Conclusion
Honeywell has great valuation metrics and solid earnings development prospects. The organization has indicated significant earnings per share shock in the last four quarters, and it showed noteworthy change in its profitability. Honeywell has recorded exceptionally solid EPS development, and it has solid earnings development prospects. Moreover, the organization had put a focus of solid organic revenue development for the following five years.
As I would see it, Honeywell will advantage from a solid worldwide pattern to vitality effectiveness and from the expanding interest for better mileage. All these components lead me to the conclusion that HON stock is a savvy speculation at this time. Moreover, the rich developing dividend speaks to a satisfying pay.
