Honeywell International Inc. HON announced that it created a business unit, Unmanned Aerial Systems (“UAS”), to tap the opportunities in the developing UAS and urban air mobility (“UAM”) industries. Following the announcement, the company’s share price increased 1.5% to eventually close at $146.63 yesterday.
Inside the Headlines
The new division under Honeywell’s Aerospace segment will be endowed with the company’s engineering and sales resources to cater to customers' requirements in the UAM market. Notably, the new business unit will focus on providing various aircraft systems, including the likes of hybrid and electric propulsion, avionics, thermal management, and services such as air traffic management and predictive maintenance.
The UAS business unit will work on developing advanced software and technologies required for UAS and UAM markets. These include fly-by-wire autopilot for aircraft stability, detect-and-avoid algorithms and artificial intelligence software for tracking landing zones. Also, the company’s new unit will operate as a system integrator for all of its products and services designed for autonomous aviation markets.
It is worth noting that over some time now Honeywell has been working on developing a series of products for the UAM market, including designing aircrafts capable of vertical take-off and landing. Notably, the company partnered with Volocopter to develop navigation and automatic landing systems for its vertical takeoff and landing aircraft. Separately, it has been working on developing avionics, navigation, flight control systems, and other products for Pipistrel's vertical takeoff and landing aircraft.
In addition, the company entered a multi-million dollar deal with Kuwait Integrated Petroleum Industries Company (“KIPIC”). The five-year deal will involve Honeywell to offer KIPIC with its advanced enterprise performance management software platform, Honeywell Forge, for boosting security and optimizing operations at the Al Zour refinery and liquefied natural gas import terminal based in southern Kuwait.
Zacks Rank, Price Performance and Estimate Trend
The company, with a $102.9-billion market capitalization, currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Going forward, Honeywell’s persistent strength across its defense and space businesses, supported by healthy demand for guidance and navigation systems, and a strong backlog will likely act as tailwinds. Also, growth in demand for warehouse automation products and supply-chain analytics will likely support its Intelligrated business. However, headwinds across its commercial original equipment business due to the ongoing 737 MAX-related issues and a lower business jet demand amid the coronavirus outbreak will significantly affect its revenues.
In the past three months, the company’s share price has increased 11.3% compared with the industry’s growth of 12.9%.
The Zacks Consensus Estimate for its earnings is pegged at $6.93 for 2020 and $7.66 for 2021, marking declines of 11.7% and 8.6% from the respective 60-day-ago figures.
Three companies that compete with Honeywell are General Electric Company GE, 3M Company MMM and Emerson Electric Co. EMR.
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