I don’t exactly think that Honeywell (NYSE:HON) is undervalued right now, but it is probably about as close to undervalued as I’m going to find in the large-cap multi-industrial space, or at least outside those stories that need significant self-improvement. With good growth in safety and productivity, ongoing growth in chemicals, a recovery in process automation, and improving conditions in aerospace, 2018 should be a pretty good year for Honeywell. What’s more, the company’s upcoming spin-offs should improve the overall long-term growth outlook, and Honeywell has more than enough liquidity to make a significant strategic acquisition or two. Like I said, this stock is not cheap, but the implied return is a little more palatable than for many of its peers.
Mixed Trends, But Overall A Good Result
With reported revenue growth of 9% and organic revenue growth of 6%, Honeywell had a good top line performance to close out fiscal 2017. Revenue growth ran the gamut, with Home and Building Technologies up just 3%, Aerospace up 5%, Performance Materials up 9%, and Safety and Productivity up 12%. It is still fairly early in the cycle, but I believe 6% organic growth (which was actually a little light of what I expected) will put Honeywell on the right side of average for its peer group this quarter.
