Moderate P/E Ratio
Strong Price to Sales Ratio
High Return on Equity
Strong Gross and Net Profit Margins
Reasonable Current and Quick Ratios
Strong Interest Coverage Ratio
🏆 Strong Business Model and Competitive Position
💡 Focus on Innovation and Sustainability
🚀 Growth Potential in Key Segments
🔍 Strategic Separation for Focused Growth
High P/FCF Ratio
Elevated EV/EBITDA Ratio
Moderate Operating Profit Margin
High Debt-to-Equity Ratio
⚠️ Margin Pressure and Integration Challenges
📉 Economic Headwinds
Overall, Honeywell demonstrates a strong business model with competitive advantages and a focus on innovation. However, potential challenges exist due to economic pressures and integration costs from acquisitions. Future prospects appear robust, particularly with strategic separations aimed at enhancing operational focus and growth.
Analysis Date: February 6, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$199.47
Current Market Price: $190.45
IV/P Ratio: 1.05x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
5.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for HON
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (21.78)
P/B ratio ≤ 1.5 (4.66)
Current ratio ≥ 2.0 (1.31x)
Long-term debt < Net current assets (3.83x)
Margin of safety (5.0%)
HON does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
A return on equity (ROE) of 29.45% demonstrates strong profitability and effective use of shareholders' equity to generate profits, indicating a solid performance.
Gross profit margin at 38.28% and net profit margin at 14.82% show that the company retains a significant portion of revenue after costs, indicating effective cost management.
An operating profit margin of 19.82% is decent but indicates that there might be room for improvement in operational efficiency to maximize profits.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
29.45%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
1.71%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
38.28%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
14.82%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The current ratio of 1.31 and quick ratio of 1.01 indicate that the company has adequate liquidity to cover its short-term obligations, which is a good sign of financial stability.
An interest coverage ratio of 7.21 shows that the company can comfortably meet its interest obligations, indicating a solid financial position.
A debt-to-equity ratio of 1.12 indicates that the company employs a significant amount of debt compared to equity, which could elevate financial risk, especially in downturns.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
1.12x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.31x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Honeywell has a robust business model characterized by a diversified portfolio that includes automation, aerospace, and advanced materials. The company has a vast installed base and recognized brands, which provide a competitive advantage. The automation segment is particularly highlighted for its leadership in digital transformation and energy security.
Honeywell's commitment to innovation is evident through their investment in R&D and their strategic focus on sustainability, particularly in their Advanced Materials segment. The company is positioned to capitalize on trends in energy security and digitalization.
There are concerns regarding margin contraction in some segments due to integration costs from acquisitions and economic pressures. The aerospace segment, in particular, is expected to face margin pressures due to the integration of CAES.
Honeywell's future prospects are promising, especially in the aerospace and automation sectors. The company expects organic sales growth driven by increasing demand in commercial aviation and ongoing investments in energy and infrastructure projects.
The planned separation of Honeywell's automation and aerospace businesses aims to unlock value and allow each entity to pursue tailored strategies. This strategic move is expected to enhance operational independence and financial flexibility.
Honeywell is cautious about the near-term economic environment, with tempered demand expectations in some end markets. The company has factored in a realistic baseline for performance, without assuming a recovery in short-cycle demand.