On 31 December 2018, Honeywell International Inc. (NYSE:HON) released its most recent earnings update. Generally, analyst consensus outlook seem bearish, with earnings expected to decline by -14% in the upcoming year. However, this outlook is not unsubstantiated given the negative past 5-year average earnings growth. With trailing-twelve-month net income at current levels of US$6.8b, the consensus growth rate suggests that earnings will decline to US$5.8b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Honeywell International in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Can we expect Honeywell International to keep growing?
The 22 analysts covering HON view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 0.4% based on the most recent earnings level of US$6.8b to the final forecast of US$6.6b by 2022. EPS reaches $9.31 in the final year of forecast compared to the current $9.1 EPS today. With a current profit margin of 16%, this movement will result in a margin of 16% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Honeywell International, I’ve compiled three fundamental aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Honeywell International worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Honeywell International is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Honeywell International? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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.