Summary
- Honeywell's guidance for 2019 included what I believe is some prudent caution, but the company is still leveraged to a range of attractive end-markets for 2019 and beyond.
- Slower growth in non-residential construction and petrochemical-related automation are risks, but aerospace and warehouse automation can compensate.
- Honeywell isn't dirt-cheap, but the relative valuation is reasonable and there's still worthwhile upside for investors who want a core long-term holding.
I thought Honeywell (HON) was one of the best multi-industrial companies for 2018, and although it wasn’t the best performer (Roper (ROP) did better, to name one), I’m basically happy with the modest outperformance it delivered. Looking into 2019, I still have this as one of my top names, given its healthy exposure to longer-cycle sectors like aerospace and its relatively positive end-market mix. With growth opportunities across its existing businesses and more capital deployment options, this looks like a good long-term holding that still has some shorter-term undervaluation to add to the appeal.
Basically On-Target In The Fourth Quarter
There weren’t many surprises in Honeywell’s fourth quarter, which is fine given that an above-average level of performance was expected and largely delivered.
