Honeywell International Inc ROIC decreased on 3.6 pp from 23.2% to 19.6% in 2016 while Revenue increased slightly on 1.9%
27 Jan 2017 • About Honeywell International Inc (
$HON) • By InTwits
Honeywell International Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Honeywell International Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's a lot of higher than industry average of 14.2%.
- CAPEX is quite volatile: 16,643 in 2016, 11,423 in 2015, 5,206 in 2014, 4,233 in 2013, 7,433 in 2012
- The company has highly profitable business model: ROIC is at 19.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Honeywell International Inc ($HON) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 37,665 | 39,055 | 40,306 | 38,581 | 39,302 | 1.9% |
| Gross Profit | 9,374 | 10,691 | 11,349 | 11,834 | 12,152 | 2.7% |
| SG&A | 5,218 | 5,190 | 5,518 | 5,006 | 5,469 | 9.2% |
| EBITDA | 5,082 | 6,490 | 6,755 | 7,711 | 7,713 | 0.0% |
| Net Income | 2,926 | 3,924 | 4,239 | 4,768 | 4,809 | 0.9% |
Balance Sheet
|
|---|
| Cash | 4,634 | 6,422 | 6,959 | 5,455 | 7,843 | 43.8% |
| Short Term Debt | 1,101 | 2,028 | 2,637 | 6,514 | 3,593 | -44.8% |
| Long Term Debt | 6,395 | 6,801 | 6,046 | 5,554 | 12,182 | 119.3% |
Cash flow
|
|---|
| Capex | 884 | 947 | 1,094 | 1,073 | 1,095 | 2.1% |
Ratios
|
|---|
| Revenue growth | 3.1% | 3.7% | 3.2% | -4.3% | 1.9% | |
| EBITDA growth | 43.9% | 27.7% | 4.1% | 14.2% | 0.0% | |
| Gross Margin | 24.9% | 27.4% | 28.2% | 30.7% | 30.9% | 0.2% |
| EBITDA Margin | 13.5% | 16.6% | 16.8% | 20.0% | 19.6% | -0.4% |
| Net Income Margin | 7.8% | 10.0% | 10.5% | 12.4% | 12.2% | -0.1% |
| SG&A, % of revenue | 13.9% | 13.3% | 13.7% | 13.0% | 13.9% | 0.9% |
| CAPEX, % of revenue | 2.3% | 2.4% | 2.7% | 2.8% | 2.8% | 0.0% |
| ROIC | 21.8% | 23.0% | 21.3% | 23.2% | 19.6% | -3.6% |
| ROE | 24.6% | 25.8% | 24.1% | 26.5% | 25.5% | -1.0% |
| Net Debt/EBITDA | 0.6x | 0.4x | 0.3x | 0.9x | 1.0x | 0.2x |
Revenue and profitability
Honeywell International Inc's Revenue increased slightly on 1.9% in 2016. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.90 pp from 8.4% to 9.3% in FY2016.
Gross Margin showed almost no change in 2016. SG&A as a % of Revenue increased slightly on 0.94 pp from 13.0% to 13.9% in 2016.
Net Income marign showed almost no change in 2016.
Capital expenditures (CAPEX) and working capital investments
Honeywell International Inc's CAPEX/Revenue was 2.8% in 2016. CAPEX/Revenue showed almost no change from 2013 to 2016. For the last three years the average CAPEX/Revenue was 2.8%.
Return on investment
The company operates at high and attractive ROE (25.54%) while ROIC is a bit lower (19.58%). ROIC decreased on 3.6 pp from 23.2% to 19.6% in 2016. ROE decreased slightly on 0.99 pp from 26.5% to 25.5% in 2016.
Leverage (Debt)
Debt level is 1.0x Net Debt / EBITDA and 2.0x Debt / EBITDA. Net Debt / EBITDA surged on 0.2x from 0.9x to 1.0x in 2016. Debt surged on 30.7% in 2016 while cash jumped on 43.8% in 2016.
Valuation
The company's trades at EV/EBITDA 1.1x and P/E 0.2x while industy averages are 15.6x and 19.1x. Honeywell International Inc's EV/(EBITDA-CAPEX) is 1.3x with the industry average at 19.0x.
Appendix 1: Peers in General Industrials
Below we provide Honeywell International Inc benchmarking against other companies in General Industrials industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 111.1% | 52.6% | 20.3% | 17.8% | |
| Macfarlane Group ($MACF) | -1.9% | 1.4% | 6.9% | 10.0% | |
| Robinson ($RBN) | -1.6% | 10.2% | 20.3% | 3.8% | |
| Thyssenkrupp Ag ($0O1C) | | -7.2% | 6.9% | 3.8% | -8.2% |
| Coral Products ($CRU) | | -0.2% | -0.3% | 1.2% | 7.4% |
| |
|---|
| Median (9 companies) | -0.3% | 1.4% | 4.4% | 1.2% | 5.0% |
|---|
| Honeywell International Inc ($HON) | | 3.7% | 3.2% | -4.3% | 1.9% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 58.9% | 54.4% | 56.0% | 54.5% | |
| Macfarlane Group ($MACF) | 32.0% | 31.2% | 30.9% | 31.5% | |
| Smurfit Kappa Group ($SKG) | 28.6% | 28.9% | 29.5% | 30.0% | |
| Coral Products ($CRU) | 22.1% | 24.6% | 23.7% | 29.6% | 33.1% |
| Jardine Strategic Hldgs ($88EI) | 24.0% | 24.0% | 25.4% | 25.5% | |
| |
|---|
| Median (9 companies) | 24.0% | 24.6% | 24.5% | 25.5% | 21.7% |
|---|
| Honeywell International Inc ($HON) | 24.9% | 27.4% | 28.2% | 30.7% | 30.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 29.5% | 29.6% | 29.2% | 25.3% | |
| Jardine Strategic Hldgs ($88EI) | 15.0% | 13.3% | 13.5% | 15.1% | |
| Smurfit Kappa Group ($SKG) | 13.4% | 12.8% | 12.7% | 14.3% | |
| General Electric Co. ($GEC) | 17.2% | 16.5% | 13.3% | 10.4% | 9.4% |
| Barloworld ($BWO) | 8.4% | 9.1% | 10.0% | 10.3% | 10.0% |
| |
|---|
| Median (9 companies) | 13.4% | 12.8% | 12.7% | 10.3% | 8.2% |
|---|
| Honeywell International Inc ($HON) | 13.5% | 16.6% | 16.8% | 20.0% | 19.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 21.3% | 8.5% | 12.1% | 9.0% | |
| General Electric Co. ($GEC) | 10.5% | 9.4% | 6.1% | 6.3% | 6.0% |
| Smurfit Kappa Group ($SKG) | 4.3% | 4.4% | 5.3% | 5.3% | |
| Robinson ($RBN) | 4.3% | 6.0% | 3.5% | 3.7% | |
| Jardine Strategic Hldgs ($88EI) | 5.8% | 5.2% | 4.1% | 2.9% | |
| |
|---|
| Median (9 companies) | 4.3% | 5.2% | 3.5% | 2.9% | 4.6% |
|---|
| Honeywell International Inc ($HON) | 2.3% | 2.4% | 2.7% | 2.8% | 2.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 21.6% | 27.1% | 24.7% | 18.9% | |
| Macfarlane Group ($MACF) | 17.9% | 22.2% | 19.0% | 17.8% | |
| Smurfit Kappa Group ($SKG) | 10.8% | 11.2% | 11.8% | 13.9% | |
| Barloworld ($BWO) | 14.0% | 13.5% | 14.1% | 12.9% | 12.8% |
| Thyssenkrupp Ag ($0O1C) | -27.3% | -6.5% | 10.8% | 9.5% | 12.7% |
| |
|---|
| Median (9 companies) | 10.3% | 9.6% | 10.8% | 9.5% | 8.0% |
|---|
| Honeywell International Inc ($HON) | 21.8% | 23.0% | 21.3% | 23.2% | 19.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| General Electric Co. ($GEC) | 10.5x | 8.9x | 12.0x | 10.6x | 7.8x |
| Coral Products ($CRU) | 1.5x | 2.9x | 3.4x | 2.7x | 2.5x |
| Smurfit Kappa Group ($SKG) | 2.9x | 2.6x | 2.7x | 2.6x | |
| Thyssenkrupp Ag ($0O1C) | 3.4x | 4.5x | 2.0x | 1.8x | 1.8x |
| Barloworld ($BWO) | 1.5x | 1.4x | 1.2x | 1.7x | 1.2x |
| |
|---|
| Median (9 companies) | 1.5x | 1.4x | 1.3x | 1.7x | 2.1x |
|---|
| Honeywell International Inc ($HON) | 0.6x | 0.4x | 0.3x | 0.9x | 1.0x |
