Will Honeywell Stock Rise Following A 9% Fall In A Month?

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The stock price of Honeywell (NYSE: HON) continues to underperform the broader indices. While the S&P500 index has seen a rise of 10% over the last six months, HON stock is down around 9%. Now, many of the industrial stocks, including MMM, CAT, and GE, have also underperformed the broader markets with negative returns of around 10% or more in the last six months. More recently, the concerns of the new Covid-19 variant – Omicron – and its impact on economic growth has spooked the markets at large. Industrial stocks, such as Honeywell and General Electric, have exposure to the Aerospace segment, with airlines being one of the worst hit sectors during the pandemic. For Honeywell, unlike some of the other industrial companies, including Caterpillar and Deere, the rebound in sales has been slower. In fact, its Aerospace segment sales are still down 5% y-o-y for the nine months period ending September 2021.

Now, with reports emerging that the impact of Omicron on the overall economic growth may not be as profound as earlier anticipated, this has given a breather to the overall markets. [1] And despite the lower sales for Aerospace, the company has posted overall revenue growth so far this year, led by gains across its other segments – Building Technologies, Performance Materials, and Safety & Productivity Solutions. Our Honeywell Revenues dashboard provides more details on the company’s segments.

Looking forward, if Omicron doesn’t result in a spike in total Covid-19 cases, the commercial airlines industry at large should continue to rebound, boding well for Honeywell. And, going by our Honeywell Valuation of $248 per share, based on EPS estimate of $8.03 and a P/E multiple of 31x in 2021, there is an upside potential of 20% from the current market price of around $206.

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But what about the near term, given that HON stock has seen a fall of 9.5% in a month? Going by its historical performance, there is a strong chance of a rise in HON stock over the next month. Out of 40 instances in the last ten years that HON stock saw a twenty-one day fall of 9.5% or more, 33 of them resulted in HON stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 33 out of 40, or a strong 83% chance of a rise in HON stock over the coming month. See our analysis on Honeywell Stock Chances of Rise for more details.

While HON stock may see higher levels going forward, it is helpful to see how its peers stack up. Check out Honeywell Stock Comparison With Peers to see how HON stock compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last ten years data

  • After moving 1.0% or more over a five-day period, the stock rose in the next five days on 52% of the occasions.
  • After moving -2.9% or more over a ten-day period, the stock rose in the next ten days on 67% of the occasions
  • After moving -9.5% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 83% of the occasions.

This pattern suggests that there are higher chances of a rise in HON stock over the next five to ten days, as well as over the next one month period.

Honeywell (HON) Stock Return (Recent) Comparison With Peers

  • Five-Day Return: MMM highest at 3.3%; MOG.A lowest at 0.4%
  • Ten-Day Return: ROK highest at 0.5%; MOG.A lowest at -5.9%
  • Twenty-One Days Return: ROK highest at 3.3%; MOG.A lowest at -12.4%

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

 Returns Dec 2021
MTD [1]
2021
YTD [1]
2017-21
Total [2]
 HON Return -10% -3% 86%
 S&P 500 Return 0% 24% 109%
 Trefis MS Portfolio Return 0% 44% 288%

[1] Month-to-date and year-to-date as of 12/10/2021
[2] Cumulative total returns since 2017

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Notes:
  1. European markets head for positive open as investors watch omicron and U.S. jobs data, Holly Ellyatt, CNBC, Dec 9, 2021 []