Honeywell International Inc. HON recently announced that its unit, Honeywell UOP's C3 Oleflex propane dehydrogenation (PDH) technology has been selected by Shandong Tianhong Chemical Co., Ltd for the production of 250,000 metric tons of polymer-grade propylene per year at its Dongying facility.
Per the contract, Honeywell will be responsible for providing licensing, process design package, on-site operator training, proprietary and non-proprietary equipment as well as key catalysts and adsorbents to Shandong Tianhong Chemical. Notably, this project marks the company’s 32nd award for Oleflex technology in China.
This apart, the company unveiled a connected portable gas detector, Honeywell BW Ultra, to ensure the safety of its workers in confined spaces. The new detector, which features Honeywell TouchConnect technology, is capable of monitoring up to five different gases at the same time that includes volatile organic compounds. Leveraging Bluetooth connectivity, the Honeywell BW Ultra enables safety managers to monitor valuable data as well.
Our Take
Honeywell is well-positioned to gain from long-term expansion in the markets like aerospace, facility automation and automotive turbochargers owing to its strong market share and product line-up. Also, the company’s continuous focus on investment in innovative technologies is likely to help Honeywell maintain its leadership position. The company is building a robust pipeline of new products too.
Further, the demand for Honeywell's construction, automobiles and airplanes products are expected to grow backed by expansion of emerging markets. In the past three months, this Zacks Rank #3 (Hold) company’s shares have returned 0.6% against the industry’s decline of 3.3%.
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Honeywell’s diversified business portfolio also helps it to earn consistent above-average returns and mitigate operating risks. Moreover, the company’s balanced mix of long- and short-cycle businesses along with decent organic growth in new products and expansion in high-growth regions bode well on a long-term perspective. With a flexible yet disciplined focus on cost and productivity, Honeywell remains focused on increasing its presence in high-growth regions.
However, the company is susceptible to material price inflation, which in turn, affects profitability. Also, the company remains highly dependent on its supply chain to scale up production and adjust delivery of long-lead time products during times of volatile demand.
Key Picks
Some better-ranked stocks from the same space are Danaher Corp. DHR, Crane Company CR and Federal Signal Corp. FSS. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Danaher surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 4.1%.
Crane outpaced estimates in the preceding four quarters, with an average earnings surprise of 2.1%.
Federal Signal exceeded estimates in the trailing four quarters, with an average positive earnings surprise of 16.1%.
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