Honeywell International shares fell by -1.4% during the day's morning session, and are now trading at a price of $194.5. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Trades Below Its Graham Number but Has an Elevated P/B Ratio:
Honeywell International Inc. operates as a diversified technology and manufacturing company worldwide. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 22.19 and an average price to book (P/B) ratio of 4.06. In contrast, Honeywell International has a trailing 12 month P/E ratio of 23.0 and a P/B ratio of 7.77.
Honeywell International's PEG ratio is 2.42, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company's Revenues Are Declining:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $41,802 | $36,709 | $32,637 | $34,392 | $35,466 | $36,408 |
| Revenue Growth | n/a | -12.18% | -11.09% | 5.38% | 3.12% | 2.66% |
| Operating Margins | 18% | 21% | 18% | 21% | 18% | 19% |
| Net Margins | 16% | 17% | 15% | 16% | 14% | 15% |
| Net Income (MM) | $6,765 | $6,143 | $4,779 | $5,542 | $4,966 | $5,414 |
| Net Interest Expense (MM) | $367 | $357 | $359 | $343 | $414 | $707 |
| Depreciation & Amort. (MM) | $721 | $673 | $644 | $674 | $657 | $656 |
| Earnings Per Share | $8.98 | $8.41 | $6.72 | $7.91 | $7.27 | $8.07 |
| EPS Growth | n/a | -6.35% | -20.1% | 17.71% | -8.09% | 11.0% |
| Diluted Shares (MM) | 753 | 730 | 711 | 700 | 683 | 667 |
| Free Cash Flow (MM) | $5,606 | $6,058 | $5,302 | $5,143 | $4,508 | $3,835 |
| Capital Expenditures (MM) | $828 | $839 | $906 | $895 | $766 | $916 |
| Current Ratio | 1.29 | 1.34 | 1.47 | 1.3 | 1.25 | 1.35 |
| Total Debt (MM) | $15,500 | $12,486 | $18,787 | $16,057 | $16,853 | $16,683 |
| Net Debt / EBITDA | 0.76 | 0.42 | 0.68 | 0.64 | 1.03 | 1.19 |
