Honeywell's 2011 Outlook

This morning Honeywell International (NYSE: HON) disseminated its outlook for 2011. In short, the New Jersey-based company known for its thermostats, fans, heaters and door chimes, among other things, said it is looking for revenue of between $35 billion to $36 billion and EPS of $3.50 to $3.70. Note that as of 30 days ago Wall Street was estimating 2011 EPS of $2.97, but has since raised the target to $3.63.

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Expected To Grow
Honeywell acknowledged that the company is growing faster than the markets it serves and, combined with the improved outlook for the global economy, its management is confident in their forecast of higher revenues, segment margin expansion, strong cash flow and double-digit earnings growth. According to Yahoo Finance!, HON is expected to grow at more than 13% per annum in the next five years. If the economy continues to bounce back then Honeywell's longer cycle buessinesses such as commercial aerospace, ACS Solutions and UOP refining technologies should be key drivers of the expected growth. In any case, double-digit earnings growth would be nothing to sneeze at given the company's size. This behemoth is expected to put up more than $33 billion in sales this year. It's not talked about much, but Honeywell also has a nice dividend, which is currently around 2.5%. (Learn more about dividend yields; read Dividend Yield For The Downturn.)

Other Companies Worth Closer Inspection
Many investors may want to keep other high-profile companies in this space on their radar screens. For example, Connecticut-based United Technologies (NYSE: UTX) provides heating and air conditioning products (among other things) that could have a very bright future. It trades at about 14.8 times the 2011 estimate, which is in line with its peers and it also has a nice dividend of just over 2%.

Milwaukee-based Johnson Controls (NYSE: JCI) has its hands in industrial and commercial HVAC equipment. The company trades at about 13 times next year's estimate. Note that JCI has also is trading near its 52-week high and could be ready to benefit from a strong 2011.

Finally, Tyco (NYSE: TYC) is involved in multiple businesses and deserves a look. It trades at 12.3 times next year's estimate and is expected to grow its EPS by more than 16% from this fiscal year to next year.

Bottom Line
Shares of Honeywell are trading in close proximity to their highs and given its strong 2011 forecast many believe they can go even higher. The company's expected growth rate over the next few years, its dividend and the fact that it can generate much higher earnings once the economy returns in earnest are all positive factors. Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!