2024-01-22 06:55:00 ET
There's a case for arguing that Honeywell International (NASDAQ: HON) is a victim of its success, and that success is creating pressure on management to change its strategy. While it may sound like an oxymoron to change a winning strategy, shareholders always want improvement, and the company's lofty valuation rating means management is under pressure to generate more value for investors. But does it all add up to make the stock worth buying this year?
The industrial conglomerate is a high-quality company, and the market knows it. While it's fair to say industrial conglomerates are hardly in vogue these days, Honeywell's valuation suggests the market does think it's different.
The market has good reason to think this way. Honeywell's mix of businesses ensures consistent growth across a range of market conditions, with management targeting 4%-7% annual revenue growth over the long term. In addition, targeted annual segment margin expansion of 40 basis points (bp, where 100 bp= 1%) to 60 bp will result in something close to double-digit earnings growth.
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Is Honeywell a Buy in 2024? Here's What You Need to Know