Tags: Honeywell | International | HON | manufacturing | industrial | aerospace

Honeywell Shows Industrial Conglomerates Aren’t Dead

By    |   Monday, 09 May 2011 12:41 PM

Honeywell International (HON) is sitting in the catbird seat. It has a diversified array of manufacturing businesses, and they are clicking on all cylinders amid surging economic growth in emerging markets and moderate rebounds in developed economies.

The company divides itself into four business units. The biggest is automation products for process controls, sensing instruments, and safety-and-security products, which account for 41 percent of revenue, according to Morningstar data. Then comes aerospace at 32 percent of sales, specialty materials at 14 percent of revenue, and transportation products at 13 percent.

Honeywell’s products range from home thermostats to aircraft parts. It’s the world’s largest maker of turbochargers and cockpit electronics. With all the company has going for it, Honeywell stock represents a compelling investment opportunity.

Profit soared 43 percent to $708 million in the first quarter from $496 million a year earlier, topping analysts’ estimates. Sales gained 15 percent to $8.91 billion,

The automation-products unit saw sales jump 17 percent to $3.7 billion, thanks to a booming industrial sector and falling dollar, which boosts exports.

Rising energy prices helped profit in the specialty-materials division soar 67 percent to $284 million. That unit’s products include chemicals to enhance refinery efficiency.

Aerospace gains driving growth

Aerospace revenue rose 7.6 percent as commercial-plane builders lifted their spending on parts. Honeywell’s series of recent acquisitions is paying off, including last year’s $1.1 billion purchase of Sperian Protection, which is helping to boost sales in the controls division.

Honeywell expects to earn between $3.80 a share and $3.95 a share for 2011, up from its earlier forecast of $3.60 to $3.80 per share. Sales may hit $36.6 billion, it says.

“The company’s result for the quarter is quite impressive, supported by an improvement in the global market environment,” write analysts at Zacks Investment Research.

“Honeywell’s short-cycle businesses as well as its commercial aerospace and residential and commercial retrofit businesses are performing impressively and (should) support future growth.”

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Honeywell International (HON) is sitting in the catbird seat. It has a diversified array of manufacturing businesses, and they are clicking on all cylinders amid surging economic growth in emerging markets and moderate rebounds in developed economies. The company divides...
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2011-41-09
Monday, 09 May 2011 12:41 PM
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