Intrinsic value of Honeywell International - HON

Previous Close

$153.66

  Intrinsic Value

$134.31

stock screener

  Rating & Target

hold

-13%

Previous close

$153.66

 
Intrinsic value

$134.31

 
Up/down potential

-13%

 
Rating

hold

We calculate the intrinsic value of HON stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 116.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  1.87
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
  4.92
Revenue, $m
  39,302
  40,560
  41,931
  43,416
  45,017
  46,736
  48,576
  50,540
  52,632
  54,856
  57,216
  59,718
  62,366
  65,168
  68,128
  71,254
  74,552
  78,031
  81,699
  85,563
  89,633
  93,919
  98,429
  103,176
  108,171
  113,424
  118,949
  124,758
  130,865
  137,285
  144,033
Variable operating expenses, $m
 
  33,567
  34,642
  35,806
  37,061
  38,409
  39,852
  41,392
  43,031
  44,775
  46,625
  46,816
  48,892
  51,088
  53,409
  55,859
  58,445
  61,172
  64,047
  67,077
  70,267
  73,627
  77,163
  80,885
  84,800
  88,918
  93,249
  97,803
  102,591
  107,624
  112,914
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  32,855
  33,567
  34,642
  35,806
  37,061
  38,409
  39,852
  41,392
  43,031
  44,775
  46,625
  46,816
  48,892
  51,088
  53,409
  55,859
  58,445
  61,172
  64,047
  67,077
  70,267
  73,627
  77,163
  80,885
  84,800
  88,918
  93,249
  97,803
  102,591
  107,624
  112,914
Operating income, $m
  6,447
  6,992
  7,289
  7,609
  7,955
  8,327
  8,724
  9,149
  9,601
  10,081
  10,591
  12,902
  13,475
  14,080
  14,719
  15,395
  16,107
  16,859
  17,651
  18,486
  19,366
  20,291
  21,266
  22,292
  23,371
  24,506
  25,699
  26,954
  28,274
  29,661
  31,119
EBITDA, $m
  7,477
  9,170
  9,480
  9,816
  10,178
  10,567
  10,983
  11,427
  11,900
  12,402
  12,936
  13,502
  14,101
  14,734
  15,403
  16,110
  16,856
  17,642
  18,471
  19,345
  20,265
  21,234
  22,254
  23,327
  24,456
  25,644
  26,893
  28,207
  29,587
  31,039
  32,565
Interest expense (income), $m
  329
  426
  460
  498
  540
  584
  632
  683
  737
  795
  857
  923
  992
  1,065
  1,143
  1,225
  1,312
  1,404
  1,500
  1,602
  1,709
  1,822
  1,941
  2,066
  2,198
  2,336
  2,482
  2,635
  2,797
  2,966
  3,144
Earnings before tax, $m
  6,447
  6,566
  6,828
  7,111
  7,416
  7,743
  8,093
  8,466
  8,863
  9,286
  9,734
  11,980
  12,483
  13,014
  13,576
  14,169
  14,795
  15,455
  16,151
  16,884
  17,656
  18,469
  19,325
  20,226
  21,173
  22,169
  23,217
  24,319
  25,477
  26,695
  27,975
Tax expense, $m
  1,601
  1,773
  1,844
  1,920
  2,002
  2,091
  2,185
  2,286
  2,393
  2,507
  2,628
  3,235
  3,370
  3,514
  3,666
  3,826
  3,995
  4,173
  4,361
  4,559
  4,767
  4,987
  5,218
  5,461
  5,717
  5,986
  6,269
  6,566
  6,879
  7,208
  7,553
Net income, $m
  4,809
  4,793
  4,985
  5,191
  5,413
  5,652
  5,908
  6,180
  6,470
  6,779
  7,106
  8,745
  9,112
  9,500
  9,911
  10,344
  10,801
  11,282
  11,790
  12,326
  12,889
  13,483
  14,107
  14,765
  15,456
  16,184
  16,948
  17,753
  18,598
  19,487
  20,421

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  9,874
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  54,146
  45,675
  47,219
  48,892
  50,695
  52,631
  54,703
  56,915
  59,270
  61,775
  64,433
  67,250
  70,232
  73,387
  76,721
  80,241
  83,955
  87,873
  92,003
  96,355
  100,938
  105,764
  110,844
  116,190
  121,814
  127,730
  133,951
  140,493
  147,370
  154,600
  162,199
Adjusted assets (=assets-cash), $m
  44,272
  45,675
  47,219
  48,892
  50,695
  52,631
  54,703
  56,915
  59,270
  61,775
  64,433
  67,250
  70,232
  73,387
  76,721
  80,241
  83,955
  87,873
  92,003
  96,355
  100,938
  105,764
  110,844
  116,190
  121,814
  127,730
  133,951
  140,493
  147,370
  154,600
  162,199
Revenue / Adjusted assets
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
  0.888
Average production assets, $m
  10,397
  10,748
  11,112
  11,505
  11,929
  12,385
  12,873
  13,393
  13,948
  14,537
  15,162
  15,825
  16,527
  17,269
  18,054
  18,882
  19,756
  20,678
  21,650
  22,674
  23,753
  24,888
  26,084
  27,342
  28,665
  30,057
  31,521
  33,061
  34,679
  36,380
  38,169
Working capital, $m
  6,727
  446
  461
  478
  495
  514
  534
  556
  579
  603
  629
  657
  686
  717
  749
  784
  820
  858
  899
  941
  986
  1,033
  1,083
  1,135
  1,190
  1,248
  1,308
  1,372
  1,440
  1,510
  1,584
Total debt, $m
  15,775
  13,153
  14,240
  15,418
  16,687
  18,050
  19,509
  21,066
  22,724
  24,487
  26,359
  28,342
  30,442
  32,662
  35,009
  37,487
  40,103
  42,861
  45,768
  48,832
  52,058
  55,456
  59,032
  62,796
  66,755
  70,920
  75,300
  79,905
  84,747
  89,836
  95,186
Total liabilities, $m
  34,777
  32,155
  33,242
  34,420
  35,689
  37,052
  38,511
  40,068
  41,726
  43,489
  45,361
  47,344
  49,444
  51,664
  54,011
  56,489
  59,105
  61,863
  64,770
  67,834
  71,060
  74,458
  78,034
  81,798
  85,757
  89,922
  94,302
  98,907
  103,749
  108,838
  114,188
Total equity, $m
  19,369
  13,520
  13,977
  14,472
  15,006
  15,579
  16,192
  16,847
  17,544
  18,285
  19,072
  19,906
  20,789
  21,723
  22,709
  23,751
  24,851
  26,010
  27,233
  28,521
  29,878
  31,306
  32,810
  34,392
  36,057
  37,808
  39,650
  41,586
  43,622
  45,762
  48,011
Total liabilities and equity, $m
  54,146
  45,675
  47,219
  48,892
  50,695
  52,631
  54,703
  56,915
  59,270
  61,774
  64,433
  67,250
  70,233
  73,387
  76,720
  80,240
  83,956
  87,873
  92,003
  96,355
  100,938
  105,764
  110,844
  116,190
  121,814
  127,730
  133,952
  140,493
  147,371
  154,600
  162,199
Debt-to-equity ratio
  0.814
  0.970
  1.020
  1.070
  1.110
  1.160
  1.200
  1.250
  1.300
  1.340
  1.380
  1.420
  1.460
  1.500
  1.540
  1.580
  1.610
  1.650
  1.680
  1.710
  1.740
  1.770
  1.800
  1.830
  1.850
  1.880
  1.900
  1.920
  1.940
  1.960
  1.980
Adjusted equity ratio
  0.290
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,809
  4,793
  4,985
  5,191
  5,413
  5,652
  5,908
  6,180
  6,470
  6,779
  7,106
  8,745
  9,112
  9,500
  9,911
  10,344
  10,801
  11,282
  11,790
  12,326
  12,889
  13,483
  14,107
  14,765
  15,456
  16,184
  16,948
  17,753
  18,598
  19,487
  20,421
Depreciation, amort., depletion, $m
  1,030
  2,178
  2,192
  2,207
  2,223
  2,240
  2,258
  2,278
  2,299
  2,321
  2,345
  599
  626
  654
  684
  715
  748
  783
  820
  859
  900
  943
  988
  1,036
  1,086
  1,139
  1,194
  1,252
  1,314
  1,378
  1,446
Funds from operations, $m
  5,314
  6,971
  7,176
  7,398
  7,636
  7,892
  8,166
  8,458
  8,769
  9,100
  9,451
  9,345
  9,738
  10,155
  10,594
  11,059
  11,549
  12,066
  12,610
  13,184
  13,789
  14,425
  15,095
  15,800
  16,542
  17,322
  18,142
  19,005
  19,912
  20,865
  21,867
Change in working capital, $m
  -184
  14
  15
  16
  18
  19
  20
  22
  23
  24
  26
  28
  29
  31
  33
  34
  36
  38
  40
  43
  45
  47
  50
  52
  55
  58
  61
  64
  67
  71
  74
Cash from operations, $m
  5,498
  6,957
  7,161
  7,381
  7,618
  7,873
  8,146
  8,437
  8,746
  9,075
  9,425
  9,317
  9,709
  10,124
  10,562
  11,024
  11,513
  12,027
  12,570
  13,142
  13,744
  14,378
  15,046
  15,748
  16,487
  17,264
  18,082
  18,941
  19,845
  20,795
  21,793
Maintenance CAPEX, $m
  0
  -394
  -407
  -421
  -436
  -452
  -469
  -488
  -507
  -528
  -551
  -574
  -599
  -626
  -654
  -684
  -715
  -748
  -783
  -820
  -859
  -900
  -943
  -988
  -1,036
  -1,086
  -1,139
  -1,194
  -1,252
  -1,314
  -1,378
New CAPEX, $m
  -1,095
  -352
  -363
  -394
  -424
  -456
  -488
  -520
  -554
  -589
  -625
  -663
  -702
  -742
  -784
  -828
  -874
  -922
  -972
  -1,024
  -1,079
  -1,136
  -1,195
  -1,258
  -1,323
  -1,392
  -1,464
  -1,539
  -1,618
  -1,701
  -1,788
Cash from investing activities, $m
  -3,342
  -746
  -770
  -815
  -860
  -908
  -957
  -1,008
  -1,061
  -1,117
  -1,176
  -1,237
  -1,301
  -1,368
  -1,438
  -1,512
  -1,589
  -1,670
  -1,755
  -1,844
  -1,938
  -2,036
  -2,138
  -2,246
  -2,359
  -2,478
  -2,603
  -2,733
  -2,870
  -3,015
  -3,166
Free cash flow, $m
  2,156
  6,212
  6,391
  6,567
  6,758
  6,966
  7,189
  7,428
  7,685
  7,958
  8,249
  8,080
  8,408
  8,755
  9,123
  9,512
  9,923
  10,357
  10,815
  11,298
  11,807
  12,343
  12,908
  13,502
  14,128
  14,786
  15,479
  16,208
  16,974
  17,780
  18,627
Issuance/(repayment) of debt, $m
  3,942
  971
  1,087
  1,177
  1,269
  1,363
  1,459
  1,557
  1,658
  1,763
  1,871
  1,983
  2,100
  2,221
  2,347
  2,478
  2,615
  2,758
  2,907
  3,064
  3,227
  3,398
  3,576
  3,763
  3,959
  4,165
  4,380
  4,605
  4,842
  5,090
  5,350
Issuance/(repurchase) of shares, $m
  -1,670
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,261
  971
  1,087
  1,177
  1,269
  1,363
  1,459
  1,557
  1,658
  1,763
  1,871
  1,983
  2,100
  2,221
  2,347
  2,478
  2,615
  2,758
  2,907
  3,064
  3,227
  3,398
  3,576
  3,763
  3,959
  4,165
  4,380
  4,605
  4,842
  5,090
  5,350
Total cash flow (excl. dividends), $m
  4,303
  7,183
  7,478
  7,744
  8,028
  8,329
  8,648
  8,986
  9,343
  9,721
  10,120
  10,063
  10,508
  10,976
  11,470
  11,990
  12,538
  13,115
  13,722
  14,361
  15,033
  15,740
  16,484
  17,265
  18,087
  18,951
  19,859
  20,813
  21,816
  22,869
  23,976
Retained Cash Flow (-), $m
  -1,086
  -432
  -457
  -495
  -534
  -573
  -613
  -655
  -697
  -741
  -787
  -834
  -883
  -934
  -987
  -1,042
  -1,100
  -1,160
  -1,222
  -1,288
  -1,357
  -1,428
  -1,504
  -1,582
  -1,665
  -1,751
  -1,842
  -1,936
  -2,036
  -2,140
  -2,249
Prev. year cash balance distribution, $m
 
  6,281
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  13,032
  7,021
  7,249
  7,494
  7,756
  8,034
  8,331
  8,646
  8,980
  9,333
  9,229
  9,625
  10,042
  10,483
  10,948
  11,439
  11,956
  12,500
  13,073
  13,677
  14,312
  14,980
  15,683
  16,423
  17,200
  18,017
  18,877
  19,780
  20,729
  21,727
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  12,495
  6,427
  6,309
  6,171
  6,012
  5,831
  5,628
  5,404
  5,158
  4,893
  4,383
  4,107
  3,818
  3,519
  3,214
  2,907
  2,601
  2,302
  2,013
  1,738
  1,480
  1,243
  1,028
  836
  669
  526
  405
  306
  226
  164
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Honeywell International Inc. is a technology and manufacturing company. The Company operates through four segments: Aerospace, Home and Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions. The Company's Aerospace segment supplies products, software and services for aircraft and vehicles that it sells to original equipment manufacturers (OEMs) and other customers. The Home and Building Technologies segment provides products, software, solutions and technologies that help owners of homes stay connected and in control of their comfort, security and energy use. The Performance Materials and Technologies segment is engaged in developing and manufacturing materials, process technologies and automation solutions. The Safety and Productivity Solutions segment is engaged in providing products, software and connected solutions to customers that manage productivity, workplace safety and asset performance.

FINANCIAL RATIOS  of  Honeywell International (HON)

Valuation Ratios
P/E Ratio 24.3
Price to Sales 3
Price to Book 6
Price to Tangible Book
Price to Cash Flow 21.3
Price to Free Cash Flow 26.6
Growth Rates
Sales Growth Rate 1.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 2.1%
Cap. Spend. - 3 Yr. Gr. Rate 2.9%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 62.9%
Total Debt to Equity 81.4%
Interest Coverage 21
Management Effectiveness
Return On Assets 9.8%
Ret/ On Assets - 3 Yr. Avg. 10.1%
Return On Total Capital 14.7%
Ret/ On T. Cap. - 3 Yr. Avg. 15.9%
Return On Equity 25.5%
Return On Equity - 3 Yr. Avg. 25.4%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 30.9%
Gross Margin - 3 Yr. Avg. 29.9%
EBITDA Margin 19.9%
EBITDA Margin - 3 Yr. Avg. 19.2%
Operating Margin 16.4%
Oper. Margin - 3 Yr. Avg. 16%
Pre-Tax Margin 16.4%
Pre-Tax Margin - 3 Yr. Avg. 16%
Net Profit Margin 12.2%
Net Profit Margin - 3 Yr. Avg. 11.7%
Effective Tax Rate 24.8%
Eff/ Tax Rate - 3 Yr. Avg. 25.6%
Payout Ratio 39.8%

HON stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HON stock intrinsic value calculation we used $39302 million for the last fiscal year's total revenue generated by Honeywell International. The default revenue input number comes from 2016 income statement of Honeywell International. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our HON stock valuation model: a) initial revenue growth rate of 3.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for HON is calculated based on our internal credit rating of Honeywell International, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Honeywell International.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of HON stock the variable cost ratio is equal to 82.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for HON stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Honeywell International.

Corporate tax rate of 27% is the nominal tax rate for Honeywell International. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the HON stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for HON are equal to 26.5%.

Life of production assets of 26.4 years is the average useful life of capital assets used in Honeywell International operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for HON is equal to 1.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $19369 million for Honeywell International - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 760.578 million for Honeywell International is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Honeywell International at the current share price and the inputted number of shares is $116.9 billion.

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Financial statements of HON
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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