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Honeywell (HON) Gains But Lags Market: What You Should Know

Zacks Equity Research

Honeywell (HON) closed the most recent trading day at $176.29, moving +0.5% from the previous trading session. This move lagged the S&P 500's daily gain of 0.95%. Elsewhere, the Dow gained 0.94%, while the tech-heavy Nasdaq added 0.8%.

Coming into today, shares of the industrial conglomerate had gained 3.6% in the past month. In that same time, the Conglomerates sector gained 2.12%, while the S&P 500 gained 2.47%.

Investors will be hoping for strength from HON as it approaches its next earnings release. In that report, analysts expect HON to post earnings of $2.08 per share. This would mark a year-over-year decline of 1.89%. Our most recent consensus estimate is calling for quarterly revenue of $9.36 billion, down 14.28% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.10 per share and revenue of $37.17 billion, which would represent changes of +1.12% and -11.08%, respectively, from the prior year.

Any recent changes to analyst estimates for HON should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. HON is currently a Zacks Rank #2 (Buy).

Digging into valuation, HON currently has a Forward P/E ratio of 21.64. This represents a premium compared to its industry's average Forward P/E of 16.86.

It is also worth noting that HON currently has a PEG ratio of 2.34. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HON's industry had an average PEG ratio of 1.81 as of yesterday's close.

The Diversified Operations industry is part of the Conglomerates sector. This industry currently has a Zacks Industry Rank of 99, which puts it in the top 39% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow HON in the coming trading sessions, be sure to utilize Zacks.com.


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