In this article I will analyze Honeywell International Stock, which its ticker (HON), based in its earning per Share (EPS) and its Price/Earning (P/E) ratio.
First, we need to see how was Honeywell International EPS doing in the last six years. By browsing HON’s EPS for the last years , I found that HON’s EPS fluctuated between 6.6$ in 2017 and 7.8$ in 2022 with drop in 2018 where it was 3.43 as shown below:
Since the EPS of 2017 is less than EPS of year 2022, its safe to say that the growth rate for HON’s EPS is 3.4%.
Now we will estimate HON’s (EPS) in year 2027 to see how much will it be by applying the following equation:
FV=PV(1+i)n
- Where PV = HON’s EPS in year 2022 = 7.8 $
- i = growth rate of HON’s EPS estimated above = 3.4%
- n = years of investment = 5 years in 2027
By plug in the data that we mentioned above in the formula, we end up with projected EPS for Honeywell International in 2027 which will be 9.22$.
Second, that we have HON projected EPS for year 2027 which is 9.22$, all what we have to do is to find the lowest (P/E) ratio for Honeywell international in the last six years, and as we said in the previous analysis we are looking for the lowest (P/E) ratio because we are conservative investors.
The lowest (P/E) ratio for HON for the last six years was 13.64 which was in year 2018.
Finally, all what we have to do is to multiply the (P/E) ratio that mentioned above to the projected HON’s EPS for year 2027 to find the price of HON’s stock in year 2027 which is as following:
Honeywell International’s Stock Price In 2027 = (9.22)*(13.64)= 125.76$
Honeywell International is not a good investment choice for the next five years because when you compare its forecasted stock price in 2027 which is 125.76$ with the current stock price which is 208.97$ you can easily see that the current price is higher than the one that as investors we expected in 2027. In simple words, if I invested 10,000 $ toady in HON stocks, I will lose 3,981.9$ from my money which is 38.82% in year 2027.
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