BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate BUSINESS DESCRIPTION Honeywell International Inc. operates as a diversified technology and manufacturing company worldwide. It operates through four segments: Aerospace; Home and Building Technologies; Performance Materials and Technologies; and Safety and Productivity Solutions. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change 11.67 31.51 17.13 GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues 3.23 0.95-0.62 Net Income 8.70 2.63 6.43 EPS 9.37 3.12 7.45 RETURN ON EQUITY (%) Ind Avg S&P 500 Q3 2017 24.20 32.56 13.41 Q3 2016 25.89 29.62 11.79 Q3 2015 25.50 29.14 12.91 BUY Sector: Industrials Sub-Industry: Industrial Conglomerates Source: S&P BUY RATING SINCE 04/23/2012 TARGET PRICE $197.31 Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years Rating History BUY Volume in Millions 2016 2017 COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History TARGET PRICE $197.31 200 180 160 140 120 100 80 50 25 0 P/E COMPARISON RECOMMENDATION We rate () a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and expanding profit margins. We feel its strengths outweigh the fact that the company shows operating cash flow. 23.22 23.77 Ind Avg 25.50 S&P 500 HIGHLIGHTS 's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 3.2%. Growth in the company's revenue appears to have helped boost the earnings per share. EPS ANALYSIS¹ ($) The debt-to-equity ratio is somewhat low, currently at 0.80, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.03, which illustrates the ability to avoid short-term cash problems. Q1 1.41 Q2 1.51 Q3 1.60 2015 Q4 1.53 Q1 1.56 Q2 1.71 Q3 1.60 2016 NA = not available NM = not meaningful Q4 1.34 Q1 1.71 Q2 1.80 Q3 1.75 2017 1 Compustat fiscal year convention is used for all fundamental data items. Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 31.51% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year. has improved earnings per share by 9.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, increased its bottom line by earning $6.21 versus $6.05 in the prior year. This year, the market expects an improvement in earnings ($7.10 versus $6.21). 36.81% is the gross profit margin for which we consider to be. It has increased from the same quarter the previous year. Regardless of the results of the gross profit margin, the net profit margin of 13.31% trails the industry average. Report Date: PAGE 1
PEER GROUP ANALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) 0% 35% UNFAVORABLE GE 10% IEP EBITDA Margin (TTM) RAVN CSL FAVORABLE ROP MMM 35% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $1.2 Billion and $153 Billion. Companies with NA or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) 0% 35% RAVN ROP UNFAVORABLE CSL MMM GE 2.5% Earnings Yield (TTM) FAVORABLE IEP 22.5% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between 0.5% and 34.1%. Companies with NA or NM values do not appear. INDUSTRY ANALYSIS The industrial conglomerates industry includes organizations that are engaged in multiple and eclectic businesses. Major players are General Electric (GE), Siemens (SI), 3M (MMM), Tyco International (TYC), and PhilipsElectronics (PHG). These companies operate in markets for aircraft engines, power generation, water processing, security technology, medical imaging, and industrial products. Most industrial conglomerates draw a majority of revenue from overseas demand. Business is affected by the fluctuation of the US dollar against other currencies. Due to globally diversified operations, conglomerates are less vulnerable to economic upswings and downturns within a particular country. The current trend is to divest poorly performing operations and focus on areas with higher growth potential. Growth is also driven by low barriers to entry due to trade liberalization in emerging economies, availability of lower cost resources overseas, and increased economies of scale. Many foreign countries lure conglomerates with incentives such as tax exemptions, loans, use of property, and subsidies in exchange for new technology, capital, and domestic growth. Rising cost of raw materials hurts industry performance. A lack of focus and the inability to manage unrelated businesses are prevalent criticisms. Many diversified business units pose synergy challenges and often result in inefficient operations. The market undervalues conglomerates, but from a financial perspective, it is a scenario of reduced returns for lower risks. GE s investors, who have been achieving nominal returns for several years, finally drove top management to spin off its Consumer & Industrial business and focus on high growth businesses such as jet engines, energy, and health care. Adverse changes to interest rates, tax rates, tariffs, or regulations impact the industry. Global environmental regulations have become more stringent. Companies incur increased capital costs for environmental protection. Industry outlook is positive as companies broadly benefit in the economic recovery. The US government budget restrictions are offset by US consumer spending which helps conglomerates boost US revenue. PEER GROUP: Industrial Conglomerates Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) EYWELL INTERNATIONAL 153.23 115,966 23.22 39,676.00 5,100.00 IEP ICAHN ENTERPRISES LP 51.86 8,769 4.51 18,889.00 1,926.00 CSL CARLISLE COS INC 110.40 6,844 21.82 3,911.60 326.70 ROP ROPER TECHNOLOGIES INC 252.38 25,834 36.63 4,391.69 709.98 GE GENERAL ELECTRIC CO 17.64 152,976 20.51 120,548.00 7,530.00 MMM 3M CO 238.08 141,802 26.60 30,996.00 5,490.00 RAVN RAVEN INDUSTRIES INC 33.20 1,187 32.55 350.41 37.02 The peer group comparison is based on Major Industrial Conglomerates companies of comparable size. Report Date: PAGE 2
Annual Dividend Rate COMPANY DESCRIPTION Honeywell International Inc. operates as a diversified technology and manufacturing company worldwide. It operates through four segments: Aerospace; Home and Building Technologies; Performance Materials and Technologies; and Safety and Productivity Solutions. The Aerospace segment supplies products, software, and services for aircraft and vehicles that it sells to original equipment manufacturers and other customers in various markets, including air transport, regional, business and general aviation aircraft, airlines, aircraft operators, defense and space contractors, and automotive and truck manufacturers. The Home and Building Technologies segment provides products, software, solutions, and technologies that help homes owners, commercial building owners, and occupants, as well as electricity, gas, and water providers. The Performance Materials and Technologies segment develops and manufactures advanced materials, process technologies, and automation solutions. The Safety and Productivity Solutions segment provides products, software, and connected solutions to customers that enhance productivity, workplace safety, and asset performance. The company was founded in 1920 and is based in Morris Plains, New Jersey. STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 4.0 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, has a growth score better than 70% of the stocks we rate. Total Return 5.0 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 90% of the companies we cover. Efficiency 5.0 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 90% of the companies we review. 115 Tabor Road Morris Plains, NJ 07950 USA Phone: 973-455-2000 http://www.honeywell.com Price volatility 5.0 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 90% of the stocks we monitor. Solvency 5.0 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 90% of the companies we analyze. Income 3.5 out of 5 stars Measures dividend yield and payouts to shareholders. The company's dividend is higher than 60% of the companies we track. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. Report Date: PAGE 3
Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial FINANCIAL ANALYSIS 's gross profit margin for the third quarter of its fiscal year 2017 has increased when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. has average liquidity. Currently, the Quick Ratio is 1.03 which shows that technically this company has the ability to cover short-term cash needs. The company's liquidity has increased from the same period last year. 1.84 Q4 FY17 7.10 E 2017(E) 7.75 E 2018(E) During the same period, stockholders' equity ("net worth") has increased by 9.81% from the same quarter last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the company will face financial difficulties in the near future. INCOME STATEMENT Net Sales ($mil) 10,121.00 9,804.00 EBITDA ($mil) 2,316.00 2,073.00 EBIT ($mil) 2,031.00 1,813.00 Net Income ($mil) 1,348.00 1,240.00 STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit www.thestreetratings.com. BALANCE SHEET Cash & Equiv. ($mil) 10,170.00 6,431.00 Total Assets ($mil) 56,768.00 53,556.00 Total Debt ($mil) 16,783.00 15,858.00 Equity ($mil) 21,074.00 19,191.00 PROFITABILITY Gross Profit Margin 36.81% 34.55% EBITDA Margin 22.88% 21.14% Operating Margin 20.07% 18.49% Sales Turnover 0.70 0.73 Return on Assets 8.98% 9.27% Return on Equity 24.20% 25.89% DEBT Current Ratio 1.35 1.20 Debt/Capital 0.44 0.45 Interest Expense 81.00 82.00 Interest Coverage 25.07 22.11 SHARE DATA Shares outstanding (mil) 762 762 Div / share 0.67 0.60 EPS 1.75 1.60 Book value / share 27.66 25.18 Institutional Own % NA NA Avg Daily Volume 2,701,646 2,417,406 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. Report Date: PAGE 4
RATINGS HISTORY Our rating for has not changed since 4/23/2012. As of 12/14/2017, the stock was trading at a price of which is 2.2% below its 52-week high of $156.70 and 34.9% above its 52-week low of $113.60. 2 Year Chart BUY: $98.42 2016 $160 $140 $120 $100 MOST RECENT RATINGS CHANGES Date Price Action From To 12/14/15 $98.42 No Change Buy Buy Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 12/14/2017) 44.62% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months. 30.32% Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss. 25.06% Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY 10005 www.thestreet.com Research Contact: 212-321-5381 Sales Contact: 866-321-8726 VALUATION BUY. This stock's P/E ratio indicates a discount compared to an average of 23.77 for the Industrial Conglomerates industry and a discount compared to the S&P 500 average of 25.50. For additional comparison, its price-to-book ratio of 5.54 indicates a significant premium versus the S&P 500 average of 3.24 and a discount versus the industry average of 6.06. The current price-to-sales ratio is well above the S&P 500 average, but below the industry average. Upon assessment of these and other key valuation criteria, proves to trade at a discount to investment alternatives within the industry. Price/Earnings 23.22 Peers 23.77 Average. An average P/E ratio can signify an industry neutral price for a stock and an average growth expectation. Price/Projected Earnings 19.77 Peers 21.31 Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations. Price/Book 5.54 Peers 6.06 Average. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. Price/Sales 2.94 Peers 2.99 Average. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. is trading at a valuation on par with its industry on this measurement. DISCLAIMER: Price/CashFlow 19.97 Peers 23.96 Discount. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. is trading at a discount to its peers. Price to Earnings/Growth 1.60 Peers 2.23 Discount. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. trades at a significant discount to its peers. Earnings Growth lower higher 3.12 Peers 8.30 Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. However, is expected to significantly trail its peers on the basis of its earnings growth rate. Sales Growth lower higher 0.95 Peers 3.10 Lower. A sales growth rate that trails the industry implies that a company is losing market share. significantly trails its peers on the basis of sales growth The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at http://www.thestreet.com/static/about/terms-of-use.html. Report Date: PAGE 5