The large-cap software company Honeywell International, Inc. (NASDAQ: HON) offers industry-specific solutions to aerospace and automotive products and services. It specializes in turbocharger control, sensing, and security technologies for buildings and homes, specialty chemicals, energy-efficient products, and solutions for homes, businesses, and transportation, etc.
Why there is slow growth in revenue
Although Honeywell is well-managed, its management must be more active in driving growth. We discovered the company’s objective by digging deep into the financial reports. First off, the firm’s revenue is growing at a very sluggish rate. Post-COVID, the company has achieved a compounded annual growth rate (CAGR) of 4.21%.
The reason for such grounded numbers is hidden in the management’s decision to focus on retaining cash. Even during COVID, when the company’s revenue decreased by 11%, It did not pump the money into operations, as we see in the regularity of net profits.
Where is the focus?
The Management is focused on giving regular dividends to the shareholders while retaining a good amount of cash in its balance sheet. Moreover, the company has an average dividend payout ratio of around 45%, with an average dividend yield of 1.8%.
Technical Analysis and Prediction of the HON Stock Price
The HON stock price has been on a downtrend since the middle of this year, indicating a bearish trend in the market. The stock reached a high of $210 in July, but since then, it has been struggling to maintain its position, with prices falling consistently. Interestingly, the stock gave a gap-down opening just the day its quarterly reports were released, which is a clear indication that investors were not happy with the numbers as we discussed earlier.
The current price action and levels
At the time of this writing, the HON stock price has taken control as the bulls reclaimed the support level of $179. The stock is moving toward its immediate resistance level of $189. The 50-day exponential moving average is $186, just below the pivot level, while the 150-day exponential moving average is $193. The stock’s 52-week high is $220, while the 52-week low is $169.
In early October, the relative strength index (RSI) hit an oversold zone of 31 while the bulls were working to reclaim the support. Currently, the RSI is hovering around its neutral zone at a value of 47.
The HON stock price is close to breaking through the resistance, and it is predicted that the breakout will likely happen as the RSI still has enough room for the bulls to push past the resistance level before it hits its oversold level of 70.
Conclusion
Honeywell International, Inc. (NASDAQ: HON) is facing growth issues, but when dug deep into the financials, it was revealed that it was instead a management plan. The current trend is negative in the HON stock price, and the prediction is bullish.
Technical Levels
Support Levels: $179 and $173
Resistance Levels: $190 and $197
