Honeywell International Inc. HON announced its deal with the U.S. Army to exhibit and fly its modernized T55 engine on the Chinook helicopter. The demonstration will take place as part of the Cooperation Research and Development Agreement practice with the U.S. Army.
The company's share price increased 1.7% yesterday, eventually closing the trading session at $155.91.
Inside the Headlines
As noted by the company, the upgraded version of the engine comes with improved changes that will allow its operators to maintain lower maintenance costs, while improving its performance and serviceability. Categorized as a 6,000-horsepower engine, the new variant will be 25% more powerful and use 10% less fuel compared to the existing T55 engine. Based closely on the current T55 variant, the upgraded version of the engine will need almost no modification on the airframe. This will benefit the armed forces, without having the requirement of retraining for their maintenance and operational workforce.
Notably, the upgraded T55 engine will be demonstrated and installed on a CH-47F Chinook heavy-lift helicopter at Fort Eustis in Newport News, VA. The company will demonstrate the engine’s installation procedure and provide details on its new compressor design that helps in bringing enhanced performance, with lower fuel burn.
Zacks Rank, Price Performance and Estimate Trend
The company, with a $109.4-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 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.
Year to date, the company’s share price has decreased 11.9% compared with the industry’s decline of 11.5%.
The Zacks Consensus Estimate for its earnings is pegged at $6.93 for 2020 and $7.66 for 2021, marking declines of 14.1% and 10.8% from the respective 60-day-ago figures.
Three companies from the industry that competes with Honeywell are General Electric Company GE, 3M Company MMM and Emerson Electric Co. EMR.
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