Is Honeywell a Buy for 2020?
Industrial conglomerate Honeywell International (NYSE: HON) has a well-deserved reputation for being one of the highest-quality companies in the industrial sector. After all, it hasn't been an easy year for the industrial economy -- U.S. industrial production growth is set to slow from 3.9% in 2018 to around 0.8% -- and a slew of industrial companies have cut guidance as the outlook dimmed through the year. However, Honeywell raised its full-year earnings guidance on every earnings call this year, and the stock is up a third on a year-to-date basis as I write. The question now is whether Honeywell is a buy for 2020.
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Management hasn't given guidance for 2020 yet, so let's take a look at analyst consensus figures and what they imply for the blue chip stock's valuations. Three common valuation metrics are shown below. Which valuation metric you prefer is, of course, subject to the consciousness of the individual stock picker, but for an industrial conglomerate I think a forward (one year out) price to free cash flow (FCF) multiple of 20 is fair value. On this basis, Honeywell's current stock price of $177 is probably close to a fair value.
Source Fool.com
