Honeywell International Inc. HON recently completed the acquisition of Carrier Global Corporation’s CARR Global Access Solutions business for an all-cash deal of $4.95 billion. This acquisition is expected to strengthen HON’s foothold in the security solutions market.
Florida-based Carrier is a provider of advanced heating, ventilation, refrigeration, air conditioning, fire, security and building automation technologies. Its Global Access Solutions business provides advanced access and security solutions, electronic locking systems and contactless mobile key solutions to residential and industrial markets.
Acquisition Rationale
The latest buyout is in sync with Honeywell’s policy of acquiring businesses to expand its market share and customer base. The inclusion of Global Access Solutions’ expertise in advanced access and security solutions, coupled with its impressive growth and margin profile, will enable HON to expand its security products portfolio and boost its building automation segment.
This acquisition will enable Honeywell to add three Global Access Solutions brands to its portfolio, namely, LenelS2 (which offers products like OnGuard and NetBox that are used by many Fortune 100 clients), Onity (provides electronic locks, including hospitality access, mobile credentials and self-storage access) and Supra (offers cloud-based electronic lockboxes and scheduling software).
This move is strategic as it includes both hardware and software solutions to support the company’s plan to align its portfolio to three megatrends comprising automation, the future of aviation and energy transition. Management expects the buyout to be accretive to its earnings per share in the first full year of possession.
With regard to this buyout, Honeywell also updated its 2024 outlook for sales, segment margin and adjusted earnings per share.
For the year, the company expects sales in the range of $38.5-$39.3 billion, higher than $38.1-$38.9 billion anticipated earlier. Organic sales are expected to increase in the 4-6% band. HON expects segmental margin in the band of 23.8-24.1% compared with 23-23.3% projected previously. Adjusted earnings per share are expected to be between $10.15 and $10.45, higher than $9.80-$10.10 anticipated earlier.
Zacks Rank, Price Performance and Estimate Revisions
Honeywell, with approximately $134.9 billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is set to gain from strength in its commercial aviation aftermarket and original equipment. However, softness in its Industrial Automation segment remains a concern.
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In the past six months, the company’s shares have gained 4.8% compared with the industry’s growth of 2.5%.
The Zacks Consensus Estimate for its earnings is pegged at $9.93 for 2024, suggesting a decrease of a penny from the 30-day-ago figure.
Stocks to Consider
A couple of better-ranked companies from the Zacks Conglomerates sector are discussed below.
Carlisle Companies Incorporated CSL presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 17%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CSL’s 2024 earnings has increased 6.5% in the past 60 days.
Griffon Corporation GFF presently flaunts a Zacks Rank of 1. It delivered a trailing four-quarter average earnings surprise of 33.5%.
In the past 60 days, the Zacks Consensus Estimate for GFF’s 2024 earnings has risen 4.8%.
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See them now >>Honeywell International Inc. (HON) : Free Stock Analysis Report
Carlisle Companies Incorporated (CSL) : Free Stock Analysis Report
Griffon Corporation (GFF) : Free Stock Analysis Report
Carrier Global Corporation (CARR) : Free Stock Analysis Report
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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 Nasdaq, Inc.
