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

Zacks Equity Research

In the latest trading session, Honeywell (HON) closed at $174.59, marking a +0.43% move from the previous day. This move lagged the S&P 500's daily gain of 0.58%. At the same time, the Dow added 0.28%, and the tech-heavy Nasdaq gained 0.48%.

Heading into today, shares of the industrial conglomerate had gained 5.07% over the past month, outpacing the Conglomerates sector's gain of 4.21% and the S&P 500's gain of 3.62% in that time.

Investors will be hoping for strength from HON as it approaches its next earnings release, which is expected to be July 18, 2019. The company is expected to report EPS of $2.08, down 1.89% from the prior-year quarter. 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. These recent revisions tend to reflect the evolving nature of short-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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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

Investors should also note HON's current valuation metrics, including its Forward P/E ratio of 21.45. Its industry sports an average Forward P/E of 17.05, so we one might conclude that HON is trading at a premium comparatively.

Meanwhile, HON's PEG ratio is currently 2.32. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HON's industry had an average PEG ratio of 1.84 as of yesterday's close.

The Diversified Operations industry is part of the Conglomerates sector. This industry currently has a Zacks Industry Rank of 73, which puts it in the top 29% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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