Honeywell (HON): Assessing Valuation After Recent Share Price Slide

Honeywell International (HON) stock has seen movement this month, drawing attention from investors looking for opportunities in the industrial sector. With performance trending lower over the past 3 months, some are assessing what might come next for this long-time industry player.

See our latest analysis for Honeywell International.

Looking at the year as a whole, Honeywell International's share price has faced a mild pullback, which suggests the recent slide reflects more cautious sentiment rather than a sharp rerating. Still, with a 1-year total shareholder return just over 4.9%, long-term investors have seen respectable if unspectacular gains.

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With Honeywell's mild declines and moderate returns, the real question is whether the recent weakness signals a bargain for patient investors or if the current price already reflects the company's future growth prospects.

Most Popular Narrative: 17% Undervalued

Honeywell International's most-followed narrative puts its fair value significantly above the recent close, highlighting optimism for the company's growth strategy after the recent share price slide.

Honeywell's decision to separate into three independent companies (Automation, Aerospace, and Advanced Materials) could unlock significant value and better position each entity for long-term growth. This could impact revenue and margins positively. The acquisition of Sundyne and strategic bolt-on acquisitions are expected to enhance Honeywell's business profile, increasing both organic growth and segment margins by expanding their portfolio of solutions.

Read the complete narrative.

Curious what bold growth projections are hidden in this price target? Discover which financial targets and key assumptions drive such a premium absence, and what could surprise bulls and bears alike. Dive in to uncover the full story that shapes this fair value.

Result: Fair Value of $252.97 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shifting trade patterns and execution challenges related to the break-up could easily derail Honeywell's growth targets if conditions deteriorate or costs surge.

Find out about the key risks to this Honeywell International narrative.

Another View: The SWS DCF Model

While analyst price targets point to Honeywell being undervalued, our SWS DCF model paints a more muted picture. According to this cash flow-based method, Honeywell's current price of $209 sits slightly above its fair value estimate of $203.55. This suggests it may be a little overvalued right now. Could a difference in assumptions about future growth and risk explain the gap?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Honeywell International for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Honeywell International Narrative

If you see the numbers differently or want to dig into the details yourself, running your own analysis takes just a few minutes. Do it your way

A great starting point for your Honeywell International research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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