Honeywell International Inc. HON recently entered into a collaboration with Bombardier to offer avionics, propulsion and satellite communication technologies for the latter’s existing and future aircraft. HON projects a revenue potential of $17 billion from the strategic partnership over its duration.
This partnership is built on HON’s commitment to three global megatrends, which are automation, the future of aviation and energy transition. The deal will involve both companies cooperating on research and development in advanced technologies, including HON’s Anthem avionics and engines.
The agreement will see collaboration between both companies to certify and make JetWave X available for Bombardier’s Global and Challenger aircraft for both newly manufactured ones and aftermarket installations. Honeywell will also offer Bombardier its full suite of advanced L-Band satellite communications products and antennas. The latest technologies will enable Bombardier to significantly enhance the safety and efficiency of its aircraft.
As noted, Honeywell and Bombardier also resolved all legacy pending litigation between them.
Honeywell expects its investments related to the latest deal to have a material impact on its results. It lowered its sales and earnings outlook. For 2024, the company currently expects sales to be in the band of $38.2-$38.4 billion compared with the prior expected range of $38.6-$38.8 billion. Organic sales are expected to increase 2% compared with 3-4% anticipated earlier. It reported sales of $36.7 billion in 2023.
Adjusted earnings per share are expected to be between $9.68 and $9.78 compared with the prior guided range of $10.15-$10.25. The metric indicates an increase from $9.16 reported in 2023.
For the fourth quarter of 2024, sales are projected to be in the range of $9.8-$10.0 billion compared with the prior expected band of $10.2-$10.4 billion. Organic sales growth is expected to be in the band of (2)-0% against 2-4% expected earlier.
It also reduced its adjusted earnings per share to $2.26-$2.36 from the prior guided range of $2.73-$2.83.
HON’s Zacks Rank & Price Performance
Honeywell, with approximately $149.5 billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is benefiting from strength in its commercial aviation aftermarket business, driven by solid demand in the air transport and business aviation markets.
However, HON has been witnessing weakness in the warehouse and workflow solutions businesses due to lower demand for projects, which has been affecting the Industrial Automation segment's performance.
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HON’s shares have gained 11.9% against the industry’s 0.8% decline in the past three months.
The Zacks Consensus Estimate for its current-year earnings has improved 0.5% over the last 60 days.
Key Picks
Some better-ranked stocks from the same space are presented below.
Graham Corporation GHM sports a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for its fiscal 2025 earnings has increased 8.4%.
Federal Signal Corporation FSS presently carries a Zacks Rank #2 (Buy). FSS delivered a trailing four-quarter average earnings surprise of 11.8%. In the past 60 days, the Zacks Consensus Estimate for Federal Signal’s 2024 earnings has increased 3.1%.
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