HON Stock Report

2-Year Price History

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Ockham's Rating

HON Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, HON the high and low end of the Price to Sales per share ratios are 1.25x and 0.78x respectively.

Notice that HON's current Price to Sales per share ratio is 0.59x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $30.80, HON is 43% below where we would expect to see it. This will beneficially factor into our final analysis of HON as it is not often that this stock sinks to these levels.

HON Cash Earnings

Looking at HON specifically in their Cash Earnings capabilities, Ockham views HON as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for HON, the current level of Cash Earnings compared to its historical levels helps identify where HON is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 19.03 and a historical low Cash Earnings per share ratio of 11.04, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for HON? From the Ockham perspective, we are looking specifically at HON to see if the market is recognizing the huge disparity between HON's past stock price to Cash Earnings ratio to today's levels. At a difference of 57% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at HON. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

HON Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for HON to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for HON is $1.21 producing a current dividend yield of 3.93%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from HON against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from HON over previous years was 5.25% while the lowest dividend yield was 1.24%. It's hard not to notice that HON pays a current dividend yield that is 21.11% above the historical median. This peaks our interest since our analysis is looks favorably upon dividend yields that are greater than the historical median.