Let's talk about the popular Honeywell International Inc. (NYSE:HON). The company's shares maintained its current share price over the past couple of month on the NYSE, with a relatively tight range of $164.31 to $178.4. However, does this price actually reflect the true value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Honeywell International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Honeywell International worth?
According to my valuation model, Honeywell International seems to be fairly priced at around 9.1% below my intrinsic value, which means if you buy Honeywell International today, you’d be paying a fair price for it. And if you believe the company’s true value is $191.03, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Honeywell International’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Honeywell International generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -1.2% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Honeywell International. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? HON seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on HON for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on HON should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Honeywell International. You can find everything you need to know about Honeywell International in the latest infographic research report. If you are no longer interested in Honeywell International, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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 email@example.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.