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Honeywell Connected Plant Initiative Joined by Alfa Laval

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Honeywell Connected Plant Initiative Joined by Alfa Laval

Honeywell's (HON) diversified business portfolio enables it to earn consistent above-average returns and mitigate operating risks.

A division of Honeywell International Inc. HON's Performance Materials and Technologies strategic business group — Honeywell UOP — recently announced that Alfa Laval Packinox has joined its Honeywell Connected Plant initiative. This will allow Alfa Laval to help refiners in increasing safety, efficiency and reliability of their operations.

Notably, the Honeywell Connected Plant is a suite of applications that helps in optimizing operations and predict plant failures, thus offering better safety, efficiency and profitability. By joining the Honeywell Connected Plant program, Alfa Laval will be able to assist petrochemical producers and refiners in improving the operating reliability of the Alfa Laval Packinox special welded heat exchangers. In fact, joining this program will allow Alfa Laval to utilize data from Honeywell Connected Plant services that would enable it to develop new heat exchanger designs apart from offering improved operating recommendations to customers.

Existing Business Scenario

Honeywell’s diversified business portfolio enables it to earn consistent above-average returns and mitigate operating risks. Increased technology spending of the global commercial aviation industry and sturdier demand for state-of-the-art technology solutions like FalconConnect will likely continue to bolster the company's revenues in the quarters ahead. Notably, the company currently anticipates organic sales growth of 5-6% for 2018.

In the past three months, shares of the Zacks Rank #3 (Hold) company have returned 13.4% compared with the industry’s growth of 6.4%.

Honeywell expects that greater operational excellence, stock buybacks and corporate tax benefits will continue driving profitability. Moreover, the company has been steadily improving liquidity on the back of its unique HOS Gold working capital tool and increased operational efficacy. This apart, management is also focused on reducing costs. This operational focus should help drive profitability in the future.

However, the company is currently facing inflationary headwinds across its entire supply-chain process. Inflation in logistics, transportation and in certain material prices might continue to weigh over Honeywell's profitability in the upcoming quarters. Also, high research and development costs could also be a drag on its Aerospace segment's profitability.

Stocks to Consider

Some better-ranked stocks from the same space are Federal Signal Corporation FSS, Danaher Corporation DHR and ITT Inc. ITT. While Federal Signal sports a Zacks Rank #1 (Strong Buy), Danaher and ITT carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Federal Signal outpaced estimates in each of the preceding four quarters, with an average earnings surprise of 22.48%.

Danaher surpassed estimates in each of the preceding four quarters, with an average earnings surprise of 4.95%.

ITT outpaced estimates in each of the trailing four quarters, with an average positive earnings surprise of 6.33%.

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