TheStreet's Quant Ratings stock-modeling service is reaffirming its "Buy" recommendation on Honeywell International (HON) , which is Thursday's "Stock of the Day" at our premium Web site Real Money.
In fact, Honeywell has rallied more than 10% in the five months since we upgraded the stock to a "Buy" from a "Hold" on April 23.
Quant Ratings evaluates thousands of stocks on a daily basis using a quantitative model that combines fundamental analysis of a firm's latest financial statements with technical analysis of a stock's price moves.
Below is an excerpt from Quant Ratings' latest analysis of HON:
Recently, TheStreet Quant Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Quant Ratings has this to say about the recommendation:
We rate HONEYWELL INTERNATIONAL INC as a Buy with a ratings score of B+. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, reasonable valuation levels and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Quant Ratings goes as follows:
- The revenue growth came in higher than the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 8.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.97, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to $1,861.00 million or 28.61% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.47%.
- HONEYWELL INTERNATIONAL INC's earnings per share declined by 6.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, HONEYWELL INTERNATIONAL INC reported lower earnings of $2.08 versus $6.21 in the prior year. This year, the market expects an improvement in earnings ($8.15 versus $2.08).
- You can view the full analysis from the report here: HON
-- Reported by Kevin Baker in Palm Beach Gardens, FL