One-glance verdict
Within fair range
$206.17 our estimate vs market $161.79
Wall Street consensus: $199.20 (-3.4% lower than our fair-value estimate)
22% below our estimate
Fundamentals snapshot
Honeywell Aerospace Inc.
HONA · NMS · Industrials · Aerospace & Defense
Current price
$161.79
52-week range
$149.19 - $297.50
Market cap
$51.28B
Balance sheet
Stretched
3.98x Stretched
Net debt $15.09B. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
1 Risk
2 rewards · 1 risks
- Reward Revenue grew 12.7% last year.
- Reward Free cash flow was positive in 3/10 years.
- Risk Insider ownership is only 0.1% (peer median: 0.1%).
What this company does
Honeywell Aerospace Inc.
Honeywell Aerospace Inc. makes and sells important parts and systems for all sorts of aircraft, from big passenger planes to military jets and even spacecraft. The money they make mostly comes from selling these high-tech components and providing services like maintenance to airlines and defense contractors worldwide. This is important because their products keep planes flying safely and efficiently, which is crucial for travel and national security.
How the company got here
Honeywell Aerospace's story began in 1914, evolving over more than a century through innovation and strategic growth within the broader Honeywell International conglomerate. Initially focused on heating and environmental controls, the company's journey into aerospace was a natural progression, leveraging its engineering expertise to serve the burgeoning aviation industry. Key turning points involved developing critical components for aircraft, from early navigation systems to advanced engine technologies, solidifying its position as a vital supplier to both commercial and defense sectors. This long history has allowed Honeywell Aerospace to build deep relationships with major aircraft manufacturers and airlines, becoming a trusted name in aviation technology.
What it actually does
Honeywell Aerospace is a major player in designing, manufacturing, and servicing a vast array of products that keep aircraft flying safely and efficiently. Think of everything from the engines that power planes to the sophisticated computer systems in the cockpit that pilots use to navigate. They also make components for cabin comfort, like air conditioning and entertainment systems, and crucial safety equipment. Essentially, if it's a critical piece of technology on an airplane, helicopter, or even a spacecraft, Honeywell Aerospace likely has a hand in making it or maintaining it. Their customers range from the companies that build new planes to airlines that operate fleets and even military organizations.
Engines and Power Systems
This segment focuses on the heart of aircraft – the engines and the systems that provide power. Honeywell Aerospace designs and manufactures jet engines for various aircraft, from small business jets to large commercial airliners, as well as auxiliary power units (APUs) which are like mini-engines that provide electricity and air power on the ground and in flight. They also produce electrical power systems that manage the distribution of energy throughout the aircraft. This is a critical area because reliable engines and power are fundamental to flight safety and operational efficiency, and it represents a significant portion of the company's business.
Avionics and Connectivity
This part of Honeywell Aerospace deals with the 'brains' and communication systems of an aircraft. It includes sophisticated cockpit displays, navigation radios, weather radar, and flight management systems that help pilots fly safely and efficiently. They also provide satellite communication systems and other connectivity solutions that allow for data transfer and communication in the air. This segment is crucial for modern aviation, enabling advanced flight control, real-time information for pilots, and passenger connectivity, making it a substantial contributor to revenue.
Structures and Safety
Within this segment, Honeywell Aerospace produces essential components that contribute to the structural integrity and safety of aircraft. This includes actuation products that control various flight surfaces, air and thermal management systems that regulate cabin temperature and pressure, and braking systems for landing. They also manufacture sensors that monitor aircraft health and performance, as well as recording devices that capture flight data. These products are vital for ensuring aircraft airworthiness and passenger safety, forming another key revenue stream for the company.
Services and Support
Beyond manufacturing, Honeywell Aerospace offers a comprehensive suite of services to keep aircraft operational throughout their lifecycle. This includes maintenance and repair plans, certification services to ensure compliance with regulations, and training programs for aviation professionals. They also operate GoDirect Trade, an e-commerce platform for buying and selling aircraft parts, and provide asset availability services to help customers manage their fleets. This segment is increasingly important as airlines and operators focus on extending the life of their aircraft and optimizing operational efficiency, representing a growing part of their overall business.
What management is betting on now
Honeywell Aerospace's current strategy is heavily focused on innovation and sustainability within the aviation sector. Management is prioritizing the development of more fuel-efficient engines and advanced materials to reduce the environmental impact of air travel. They are also investing in digital solutions and connectivity to enhance aircraft performance and operational efficiency for their customers. Furthermore, Honeywell is looking to capitalize on the growth in defense and space markets, leveraging its technological expertise to secure new contracts and expand its presence in these areas. This forward-looking approach aims to position Honeywell Aerospace as a leader in the future of flight.
Price history
How the share price has moved
—
Loading price history…
Is it cheap or expensive?
Fair value $206.17 vs current price $161.79
Wall Street consensus is the average analyst price target: $199.20 (-3.4% lower than our fair-value estimate).
Our most-likely fair value is $206.17 a share — about 27.4% away from today's price of $161.79, so the stock currently looks fairly priced.
Is it drowning in debt?
Stretched
Net debt $15.1B. Interest coverage 4.0x.
Net debt
$15.09B
Interest coverage
3.98x
Honeywell Aerospace Inc.'s profit covers its interest bill about 4.0 times over. and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Stretched
Worse cushion
Baseline
Better cushion
HONA
BASELINE
Honeywell Aerospace Inc.
Total debt $16.15B Interest coverage 3.98x This is the baseline the peer rows are being compared against.
Total debt $48.36B Interest coverage -1.95x -100% vs HONA This peer has almost no interest-payment cushion compared with HONA.
Total debt $20.54B Interest coverage 6.92x +74% vs HONA Carries about 1.7x more debt cushion than HONA.
Total debt $9.48B Interest coverage 13.32x +235% vs HONA Carries about 3.3x more debt cushion than HONA.
Total debt $4.66B Interest coverage 14.11x +254% vs HONA Carries about 3.5x more debt cushion than HONA.
Total debt $38.86B Interest coverage 5.07x +27% vs HONA Carries about 1.3x more debt cushion than HONA.
What you should know
The case for and against HONA
2 Rewards
1 Risk
Rewards
-
Revenue grew 12.7% last year.
-
Free cash flow was positive in 3/10 years.
Risks
-
Insider ownership is only 0.1% (peer median: 0.1%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
49.33x
Forward P/E
18.15x
P/B
-9.00x
P/S
2.86x
EV/EBITDA
18.61x
PEG ratio
1.08x
Profitability
How much profit each dollar creates
Gross margin
34.5%
Operating margin
14.7%
Net margin
10.9%
ROE
—
ROA
—
Health
Liquidity and balance-sheet strength
Debt / equity
—
Current ratio
1.53x
Quick ratio
0.76x
Total debt
$16.15B
Total cash
$1.06B
Growth
How the business has been compounding
Revenue TTM
$17.92B
Revenue 5Y CAGR
12.3%
EPS TTM
3.28
EPS 5Y CAGR
-21.5%
Cash flow
How much cash the business throws off
Operating CF TTM
$3.71B
Free CF TTM
$3.20B
FCF margin
17.9%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
—