Business Strategy and Outlook| Joshua Aguilar |
Honeywell is one of the strongest multi-industry firms in operation today. We think the firm has successfully pivoted to capture multiple ESG trends, including the need to drive energy efficiency, reduce emissions, and e-commerce, among others. We predicate our thesis mostly on a) increased demand for warehouse automation solutions; b) new digital offerings that promote data analytics in powerplants, as well as remote security management, and energy savings in building solutions; c) an increasingly automated world in mission critical end-markets like life sciences. Over the next five years, we think Honeywell is capable of mid-single-digit-plus top-line growth, incremental operating margins in the low-30s, low-double-digit adjusted earnings per share growth, and free cash flow margins in the midteens.