November 8, 2017

HON – Market expectations are for record-high Uniform ROA, but management has concerns about margins and organic growth


  • Honeywell International Inc. (HON:USA) currently trades near recent highs relative to UAFRS-based (Uniform) Earnings, with a 21.9x Uniform P/E, implying fairly bullish expectations for the firm. However, management has concerns about margins and organic growth
  • Specifically, management appears concerned about the sustainability of margin expansion in their Performance Materials and Technologies segment, and segment-wide profit improvement. They may also lack confidence in their ability to maintain organic growth rates through Q4 and in their ability to drive 20% organic growth in their Workflow business

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