Honeywell Stock Forecast: Bringing WiFi To Airlines

Honeywell Stock Forecast: Innovative technology is shaping the future by transforming tasks that once required intensive human labor.

Some of the biggest advances are addressing challenges that have plagued aerospace and industrial businesses for years. For example, the aerospace industry is becoming safer and more reliable, as automation monitors the mechanical components of aircraft to prevent unexpected downtime.

Warehouses and related logistics centers are seeing greater efficiency and fewer injuries through automation. Companies like Honeywell, General Electric, and United Technologies are leading the change by taking on projects that will increase connections to the Internet of Things (IoT) and improve workflow in a variety of settings.

By all indications, such innovations will play a key role in the future of business, and investors want to get on board – but the question is, which of these organizations is most likely to succeed?

Investors are no stranger to industrial stocks, and these companies have long been key components of diversified portfolios. However, those who wish to buy industrial stocks now are concerned. Shares in some of these companies have already increased in value as a result of mergers, acquisitions, and divestitures.

Others have gone up with the standard cyclical rise in aerospace, home and building technologies, and safety and productivity solutions. Have share prices peaked for now, or is there still some room for growth if new investors buy today?

What Does Honeywell Do? 

Honeywell [NYSE: HON] has been at the forefront of technological innovation for more than a 100 years. It has a rich history of inventing the future, and today it is deeply involved in aerospace, building technologies, performance materials and technologies, and safety and productivity solutions.

Honeywell technology can be found aboard nearly every spacecraft, commercial aircraft, and defense aircraft in service today. The company offers some of the most advanced technology available for fuel efficiency, and it has developed a variety of remedies for common issues that prevent direct, on-time flights.

It works to make flying safer for everyone aboard, and it has created new methods for keeping the world’s busiest airports operating efficiently and effectively.

Commercial passengers don’t tend to notice a lot of those behind-the-scenes improvements, but they do notice Honeywell technology when it makes their in-flight experience better. For example, Honeywell is responsible for much of the on-board wifi available to passengers today – a major win.

On the safety and productivity side, Honeywell is a leader in industrial connectivity, which improves safety for those working in industrial, manufacturing, and logistics settings. IoT technology has the added benefit of improving productivity through increased automation and more efficient use of labor.

Examples of Honeywell technology in use today include barcode scanners, mobile computers, voice-enabled software, and advanced protective equipment.

This technology gives Honeywell a place in an important growing industry: e-commerce. As digital shopping gains market share, the logistics of storing, shipping, and delivering product will become even more critical than they are today. Price won’t be the deciding competitive factor – consumers will choose to buy from the companies that deliver orders fastest. That’s where Honeywell technology shines. It has already been used in state-of-the-art Amazon distribution centers, and its client list is growing.

The old Honeywell [NYSE: HON] was a sprawling conglomerate that touched a wide variety of industries. In the past year, the company has refocused, making aerospace and IoT connectivity its core business. The automotive division was released and renamed Garrett Motion, and the home products division is now Resideo Technologies.

The changes have prompted new interest from investors, and share prices increased by 22 percent in the first half of the year. Now, investors and analysts are reviewing second quarter results and anticipating third quarter financials in an effort to determine whether those stock prices will keep going up.

Honeywell by the Numbers

When Honeywell [NYSE: HON] announced its second quarter 2019 results, analysts were pleasantly surprised. Though the company did not meet revenue expectations, it did exceed second quarter expectations for earnings by 2 percent. Perhaps more importantly, business leaders raised guidance for the third quarter.

Some of the contributing factors in earnings improvements include better-than-expected operating margins. These reached 21.3 percent. One of the most critical figures – organic sales growth – came in at 5 percent, in part because aerospace grew by 11 percent.

Within aerospace, space and defense grew by 20 percent. Total organic growth is expected to come in at high single-digits for the year, which is good news for investors. Other positive signs include a predicted increase of 4 percent to 6 percent in full-year revenue, and 8 percent to 10 percent growth in earnings per share.

Overall, Honeywell [NYSE: HON] boasts approximately $35 billion in total sales, and 10 percent adjusted earnings per share (EPS) in the past five years. Other notable results include 2018’s 10 percent dividend increase and a total five year shareholder return of 68 percent. Better still, Honeywell announced another 10 percent dividend increase effective fourth quarter 2019.

These results – and a long history of success – has kept investors going back to Honeywell for long-term stock purchases. Of course, past success doesn’t predict future results. Those looking for the right company to invest in today want to know if Honeywell is a good bet. Is there still room for growth, or has Honeywell peaked?

Is Honeywell a Buy? 

The financial projections outlined in the second quarter earnings call are based on current economic conditions, which include an on-going trade dispute between the US and China.

Deteriorating conditions could bring year-end results down, so the guidance delivered during the second quarter earnings call was conservative. However, if conditions improve – even slightly – Honeywell and its investors could be big winners.

While Honeywell [NYSE: HON] is certainly no one’s idea of a dazzling growth stock, it has been a steady producer year after year. It’s been included on the Fortune 500 list for decades, and in 2019 it was ranked 77th.

Overall, analysts rate this one a buy for its strong balance sheet, and its proven ability to adjust and adapt to changing markets.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.