3 Reasons to Buy Honeywell Stock Like There’s No | Global Market News
Given the uncertainty created by the continuing tariff battle, buyers have braced themselves for a slew of downgrades to full-year steerage from industrial corporations. That makes the current first-quarter outcomes and steerage from Honeywell (*3*) (NASDAQ: HON) a bit more spectacular, and the stock seems like a good worth for affected person buyers.Here are three the explanation why.Where to invest $1,000 proper now? Our analyst staff simply revealed what they consider are the ten best stocks to buy proper now. Learn More »
1. Honeywell’s steerageThe company has an spectacular historical past of beating and raising steerage, so buyers get involved when it fails to accomplish that. Still, with all of the financial uncertainty round tariffs and whether or not they’re a non permanent tactical measure for negotiation or a strategic act to reshape provide chains and shift industrial exercise, it could be comprehensible if Honeywell had dangerous news for buyers.For instance, its aerospace peer RTX shocked the market with its replace on a potential tariff hit. Some corporations have elected not to give steerage, and others, like 3M, have identified the potential hit to earnings from tariffs in 2025.However, Honeywell raised its steerage’s midpoint by reducing its vary’s low finish. On its fourth-quarterearnings call management forecast a full-year 2025 earnings per share (EPS) vary of $10.10 to $10.50. However, management upgraded its steerage to a new vary of $10.20 to $10.50. For reference, the up to date steerage incorporates management’s estimate for the influence of present tariffs.That’s not to say Honeywell is not feeling the pinch from tariff-related uncertainty within the economic system. Indeed, management lowered its full-year gross sales expectations in a single of its most cyclical companies, industrial automation, to a mid-single-digit decline from a prior estimate for a low-single-digit decline. Still, Honeywell’s total first-quarter natural gross sales growth of 4% was forward of inner expectations (notably in business aerospace aftermarket), and management nudged its full-year gross sales steerage in building automation increased.
All advised, Honeywell’s glorious first quarter and conservative-looking steerage create a lot of potential for the company to exceed management’s steerage in 2025.2. Relatively well-placed to deal with tariffsAs famous, Honeywell’s steerage incorporates a $500 million hit from elevated tariffs. Still, management is discovering methods to offset this by means of pricing actions and looking for different sourcing for tariff-impacted merchandise/supplies.That job is more simple as a result of Honeywell tends to produce and promote regionally. A chart in its first-quarter earnings presentation outlines that more than 80% of its gross sales within the U.S. and Europe are made regionally, and 50%-80% of its China and rest-of-the-world gross sales are produced regionally.That’s not to say tariffs do not influence Honeywell. However, as a internet exporter to China, the important thing trading relationship for Honeywell’s tariff influence is U.S./China. Given the huge tariffs already imposed on one another, and the truth that Honeywell has integrated these tariffs into its steerage, it is honest to say there’s upside potential for Honeywell’s earnings, given any easing of U.S./China trading relations.3. An ongoing catalyst for changeThe closing purpose for optimism over Honeywell comes down to its breakup plans. Management is planning to spin off its superior supplies business as Solstice Advanced Materials in late 2025/early 2026, and the nice news is that management expects its growth to improve within the back half of 2025, setting the company up properly for the spin.
Similarly, Honeywell Aerospace continues to grow at a high-single-digit fee, with ongoing demand within the business aftermarket and authentic tools gross sales growing as airplane producers search to ramp manufacturing and ship on multiyear backlogs. Meanwhile, growth in building automation is offsetting tariff-related weak spot in industrial automation.In short, all three future corporations — Solstice Advanced Materials, Honeywell Aerospace, and Honeywell Automation — ought to begin life as stand-alone corporations in growth mode. That will help guarantee profitable spinoffs. It’s a main plus as a result of the long-term potential to improve growth is important, notably in aerospace as airplane manufacturing ramps up and automation as industrial corporations look to invest in automation to facilitate shifting manufacturing away from low-labor-cost nations.
Image source: Getty Images.
A stock to buyFor near-term and long-term-focused buyers, Honeywell’s stock is engaging. There’s actual potential for Honeywell to beat its steerage in 2025 for near-term buyers.Meanwhile, suppose you consider that breakups permit management to generate operational enhancements within the separated companies by devoting more time, effort, and capital to them in keeping with their wants. In that case, Honeywell can be an excellent stock for long-term buyers.
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Lee Samaha has no place in any of the stocks talked about. The Motley Fool has positions in and recommends 3M. The Motley Fool recommends RTX. The Motley Fool has a disclosure coverage.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.
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