Analyzing What Honeywell Stock Has to Offer Right Now

Could the stock be a good recovery play?

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Honeywell International Inc (NASDAQ:HON) recently announced its participation at a number of upcoming investor-focused events this March. These events include HON's 2022 investor conference on March 3, the Virtual Vertical Research Partners Energy Efficiency and Climate Solutions Day on March 8, the Bank of America Global Industrials Conference 2022 on March 15, and the JPMorgan Industrials Conference on March 15.

Honeywell stock is on the rise after hitting a two-and-a-half year low of $174.42 on Feb. 24, though it still suffers a 10.6% year-to-date deficit, and a 9.7% year-over-year loss. The security has been consolidating beneath a recent ceiling at the 20-day moving average, but it did manage to break through former pressure at the 10-day moving average just one session after its annual low. Adding to this, Honeywell International also offers a dividend yield of 2.1% with a forward dividend of $3.92.

HON march 3

Options traders have remained optimistic. In fact, at the  International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), HON's 10-day call/put volume ratio of 2.67 stands higher than 83% of readings from the past year, implying a healthier-than-usual appetite for long calls. 

The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.52, which sits in the 13th percentile of its 12-month range, echoes this. It means that short-term options traders have been a lot more call-biased than usual of late. 

However, Honeywell stock’s fundamentals are relatively poor due to its high valuation in combination with its declining business revenues and profits. Honeywell stock trades at a pricey forward price-earnings ratio of 21.98 and a high price-sales ratio of 3.84. Moreover, HON previously reported consecutive years of top- and bottom-line declines. Between fiscal 2018 and fiscal 2020, Honeywell's revenues fell 22% and its net income dropped 29%.

Honeywell’s revenues and net income have increased 5.4% and 16%, respectively, since fiscal 2020. In addition, HON is estimated to grow revenues by 6.5% and earnings by 11.5% for fiscal 2022, potentially making Honeywell stock an option as a recovery play.


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