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Honeywell International Inc. (NYSE:HON): Is It A Smart Long Term Opportunity?

Simply Wall St

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After Honeywell International Inc.'s (NYSE:HON) earnings announcement on 31 March 2019, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by -11% next year compared with the higher past 5-year average growth rate of -1.0%. Currently with trailing-twelve-month earnings of US$6.8b, we can expect this to reach US$6.0b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Honeywell International

What can we expect from Honeywell International in the longer term?

The longer term view from the 21 analysts covering HON is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of HON's earnings growth over these next few years.

NYSE:HON Past and Future Earnings, April 30th 2019

By 2022, HON's earnings should reach US$6.9b, from current levels of US$6.8b, resulting in an annual growth rate of 5.2%. This leads to an EPS of $9.68 in the final year of projections relative to the current EPS of $9.1. Margins are currently sitting at 16%, approximately the same as previous years. With analysts forecasting revenue growth of 0.01846 and HON's net income growth expected to roughly track that, this company may add value for shareholders over time.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Honeywell International, I've compiled three key aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Honeywell International worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Honeywell International is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Honeywell International? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.