Add to this Honeywell dip: here is the plan

Sarge favourite Honeywell (HON) reported an distinctive quarter on Friday morning. Hit, in my view, on all cylinders whereas growing the margin in passing.

Let’s discover.

For the second quarter, Honeywell posted adjusted EPS of $ 2.02 and GAAP of $ 2.04. Through the use of both metric, the corporate far exceeded expectations. The truth that the adjustment labored to cut back profitability, I believe, tells us one thing constructive concerning the integrity of this administration crew.

Income technology for the interval ended at $ 8.81 billion, additionally a tempo, and ok for 17.8% year-over-year progress. To be clear, this determine, whereas certainly constructive, continues to be 4.6% decrease than the $ 9.24 billion the corporate generated for the second quarter of 2019. It was thought of disappointing on the time. . That mentioned, that (Q2 2021) was the year-over-year first quarter income progress for Honeywell since Q3 2018.

Dig in

As talked about, the margin has improved total. For the corporate as an entire, the working margin elevated 450 foundation factors to 18.1%. Money stream from operations reached $ 1.278 billion, down 14% … however free money stream was $ 1.468 billion, up 17%. Section efficiency to the check … Aerospace is the most important unit and the return of the Boeing 737-MAX to the skies hasn’t damage Honeywell. Aerospace gross sales elevated 9% (7% organically) to $ 2.766 billion, Aerospace phase margin elevated from 20.8% to 25.7%.

The second largest unit could be Efficiency Supplies and Applied sciences. This unit noticed gross sales progress of 15% (10% organically) to $ 2.552 billion because the phase’s margin elevated from 18.9% to twenty.8%. Safety and productiveness options noticed gross sales improve 35% – assume PPE – (35% organically) to $ 2.083 billion, with the phase’s margin edging up from 13.8% to 14%. Lastly, Honeywell Constructing Applied sciences recorded a 20% improve in gross sales (13% organically) to $ 1.407 billion, with the phase margin enhancing from 21.2% to 22.4%.

CEO Darius Adamczyk mentioned: “We’re notably happy to see a turnaround in a number of of our key finish markets which were hit hardest by the pandemic, with enterprise penalties and UOP exercise resuming progress over the course of the yr. trimester. “


For the complete yr, Honeywell now guides adjusted EPS to between $ 7.95 and $ 8.10, down from $ 7.75 to $ 8.00 beforehand. Wall Avenue is $ 8.01 on this quantity. By way of income, Honeywell now sees your entire yr reaching $ 34.6-35.2 billion, up from $ 34.0-34.8 billion beforehand. The road consensus is for gross sales of $ 34.88 billion.

My minds

The worm has turned in the best course for this enterprise, in addition to for various elements of the enterprise. Whereas we won’t say the inventory made a revenue, the inventory steadily gained all year long (2021) lengthy after being executed in late 2020. The corporate pays shareholders a good dividend of $ 3.60 per yr, which appears a bit small by way of return (1.6%) as a result of inventory buying and selling at 29 instances forecast earnings.

I’m lengthy this title. I want to purchase extra on a plunge. In truth, I might have appreciated this morning’s revenue taking to be a bit extra aggressive, so I might get aggressive as properly.


Readers will grasp Honeywell’s actions at an inflection level. The month of June constructed a mug sample that was adopted by a really quick creating grip earlier this week. A $ 234 pivot that fashioned final week was examined yesterday (earlier than earnings) and failed.

On the identical time, we’ve an nearly wholesome trying each day MACD and a reasonably impartial RSI (Relative Energy Index), however a full stochastic oscillator nonetheless screaming “overbought”.

My Plan (minimal heaps)

I believe I add on this dip, though clearly I ought to have added in mid-June. I do not need. That mentioned. I need to make this submit develop. I will not add a lot as this place is successful and I do not need to smash my web base.

– Purchase 100 shares of HON at or close to the final sale of $ 227.78

– Promote (write) a $ 227.50 HON put expiring at present (July 23) for round $ 0.90.

To notice: That method I will add extra right here, and if the shares are available in late, seize extra for an efficient worth of $ 226.60. If the inventory would not drop under $ 227.50 later within the day, the worth of the primary purchase drops to $ 226.88 efficient.

(Honeywell is an curiosity in Jim Cramer’s Motion Alerts PLUS member membership. Need to be alerted earlier than Jim Cramer buys or sells HON? Study extra now.)

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