Honeywell International Inc. (HON): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Honeywell reported year-over-year increases in both revenues and earnings in third quarter 2014. With a diversified business portfolio that mitigates operating risks, Honeywell has the potential to earn consistent above-average returns in the long term. In the current quarter, Honeywell has restructured its operating segments to leverage on the shared business models and the engineering and technology similarities. The company has a flexible yet disciplined focus on cost and productivity, and maintains a conservative balance sheet. Honeywell also continues to benefit from investments in new products and services. However, adverse foreign currency translations and volatility in commodity prices are likely to peg back its growth momentum to some extent. We maintain our Neutral recommendation for the stock.

Overview:

Honeywell International Inc. is a global diversified technology and manufacturing company, with a wide range of aerospace products and services, control, sensing and security technologies for buildings, homes and industry, turbochargers, automotive products, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals and energy efficient products and solutions for homes, business and transportation..

Based in Morris Township, New Jersey, the company is a global leader in refrigerants, aerosols, and foam-insulation blowing agents that are used to replace ozone-depleting Chlorofluorocarbon and Hydro Chlorofluorocarbons. These products also improve the energy efficiency of homes, appliances, and commercial refrigeration systems. Honeywell is engaged in manufacturing, sales and service, research and development activities, mainly in the United States, Europe, Canada, Asia and Latin America.

Honeywell organizes its business into three operating segments:


Automation and Control Solutions (36.3% revenues came from this segment in third-quarter 2014) provides environmental and combustion controls, sensing controls, security and life safety products and services, process automation and building solutions and services for homes, buildings and industrial facilities.

Aerospace (38.5%) is a leading global provider of integrated avionics, engines, systems and service solutions for aircraft manufacturers, airlines, business and general aviation, military, space and airport operations.

Performance Materials and Technologies segment (25.2%) offers leading technologies and high-performance materials, including hydrocarbon processing technologies, catalysts, adsorbents, equipment and services, fluorine products, specialty films and additives, advanced fibers and composites, intermediates, specialty chemicals, electronic materials and chemicals.

Honeywell has decided to reorganize its operating segments by merging Transportation Systems segment with the Aerospace segment to leverage on the shared business models and the engineering and technology similarities. Effective third-quarter 2014, the three business segments of the company are: Aerospace, Automation and Control Solutions, and Performance Materials and Technologies. The overall financial performance of the company will include Transportation Systems within Aerospace segment and will have no material impact on the historical consolidated financial position, results of operations, or cash flows.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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