Honeywell Design Passes Review - Analyst Blog

The critical design review of Honeywell International's (HON) on board Computer, reaction wheel assembly and inertial measurement unit, has passed off successfully. These components are part of Global Positioning Satellite (GPS) III program of the U.S. Air Force.

 

The total value realizable by Honeywell by supplying these components to Lockheed Martin (LMT), the main contractor for the GPS III program, is greater than $106 million.

 

The GPS system provides exact coordinates for military and civil users. The GPS III system will become operational in 2014. It is expected to improve accuracy and provide anti-jamming measures which are critical for the U.S. defense establishment.

 

Honeywell is a leading supplier of electronics, consumable hardware, engine controls, environmental controls, landing systems, power systems, propulsion engines, aerospace services and space products and systems for the aerospace industry, including commercial and regional airlines, air cargo carriers, as well as Original Equipment Manufacturers (OEMs) of commercial, regional, military aircraft and spacecraft.

 

Honeywell’s attractive collection of businesses has the potential to earn consistently above-average returns. The company’s focus on working capital management, free cash flow generation and balance sheet strength remain positive attributes in the current weak environment. 

 

The company is a global leader in refrigerants, aerosols and foam-insulation blowing agents used to replace ozone-depleting Chlorofluorocarbon and Hydro chlorofluorocarbons. These same products also improve the energy efficiency of homes, appliances and commercial refrigeration systems.

 

The company’s proactive restructuring initiatives have positioned it to navigate better than many of its peers, but we have yet to see signs of stabilization in a number of its major end markets.

 

At Automation and Control Systems, the largest segment by revenue, industrial customers are delaying both capital and operating spending across a number of businesses, driven by weakening demand.

 

Honeywell International Inc. (HON) is a diversified technology and manufacturing company, serving customers worldwide with aerospace products and services, control, sensing and security technologies for buildings, homes and industry, turbochargers, automotive products, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals and energy efficient products and solutions for homes, business and transportation.

 

We currently have a Neutral recommendation on Honeywell International.