Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Honeywell International Inc. pages available for free this week:
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Economic Profit
Honeywell International Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited fluctuations over the five-year period. It increased from 5,376 million USD in 2020 to 5,961 million USD in 2021. However, a decline occurred in 2022, dropping to 5,460 million USD, before recovering to 5,956 million USD in 2023 and slightly increasing again to 5,978 million USD in 2024. Overall, NOPAT demonstrated moderate variability with a general upward trajectory from 2020 to 2024.
- Cost of Capital
- The cost of capital showed minor variations throughout the examined years. It rose marginally from 13.16% in 2020 to 13.49% in 2022, followed by a slight decrease to 13.36% in 2023 and a more pronounced reduction to 12.82% in 2024. This trend indicates a gradual lowering of the expense associated with capital financing, potentially reflecting improved market conditions or capital structure optimization.
- Invested Capital
- Invested capital initially decreased from 49,130 million USD in 2020 to 47,332 million USD in 2022, suggesting a period of divestment or asset reduction. Subsequently, it increased moderately to 48,147 million USD in 2023. A significant jump was observed in 2024, with invested capital rising to 60,349 million USD. This substantial increase may indicate major acquisitions, investment in assets, or other strategic capital expenditures.
- Economic Profit
- Economic profit remained negative across all years, indicating that the company's returns did not exceed its cost of capital during the period. Losses narrowed in 2021 to -427 million USD from -1,091 million USD in 2020, showing some improvement. However, economic profit worsened again in 2022 to -924 million USD, slightly improved in 2023 to -477 million USD, and then deteriorated significantly in 2024 to -1,758 million USD. The volatility and increasing negative value in 2024 suggest challenges in generating value above the cost of capital despite rising NOPAT.
Net Operating Profit after Taxes (NOPAT)
Honeywell International Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances.
3 Addition of increase (decrease) in customer advances and deferred income.
4 Addition of increase (decrease) in obligations for product warranties and product performance guarantees.
5 Addition of increase (decrease) in repositioning reserves.
6 Addition of increase (decrease) in equity equivalents to net income attributable to Honeywell.
7 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
8 2024 Calculation
Tax benefit of interest and other financial charges = Adjusted interest and other financial charges × Statutory income tax rate
= × 21.00% =
9 Addition of after taxes interest expense to net income attributable to Honeywell.
10 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
11 Elimination of after taxes investment income.
The financial data reveals the following trends for the analyzed period:
- Net Income Attributable
- The net income attributable to the entity showed a positive growth trend overall. Starting from approximately $4,779 million at the end of 2020, it increased to $5,542 million in 2021, reflecting a strong upward movement. However, there was a decline in 2022 to about $4,966 million, indicating a possible short-term setback or increased costs impacting profitability. The amount rebounded in 2023, reaching $5,658 million, and continued a slight increase into 2024, ending at $5,705 million. This pattern suggests resilience and recovery after the dip in 2022, with sustained profitability gains in the subsequent years.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT figures display a somewhat similar pattern to net income but overall maintain higher absolute values. The measure rose from $5,376 million in 2020 to $5,961 million in 2021, showing improvement in operations after tax considerations. A decrease occurred in 2022 to $5,460 million, mirroring the net income dip but with a less pronounced decline percentage-wise. Subsequently, NOPAT increased again to $5,956 million in 2023 and remained relatively stable into 2024 at $5,978 million. This trend indicates operational efficiency and effective tax management despite fluctuations, contributing to a steady NOPAT performance post-2022.
Overall, the data points to a company experiencing growth after 2020, facing a temporary decrease in 2022 in both net income and NOPAT, and then recovering with stable or increasing profitability through 2023 and 2024. The recovery phase suggests effective management responses to prior challenges, with consistent operational profit maintenance after tax effects considered.
Cash Operating Taxes
Honeywell International Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The analysis of the financial data reveals a fluctuating trend in tax-related expenses over the five-year period from 2020 to 2024.
- Tax Expense
- This item shows variability, with an initial increase from 1147 million US dollars in 2020 to a peak of 1625 million in 2021. Afterward, there was a decline to 1412 million in 2022, followed by a modest increase to 1487 million in 2023 and a slight decrease to 1473 million in 2024. Overall, the tax expense exhibits moderate fluctuations without a clear linear trend, suggesting changes in taxable income, tax rates, or tax planning strategies may have impacted this item.
- Cash Operating Taxes
- Cash operating taxes display a somewhat different pattern, with an increase from 1380 million in 2020 to a higher level of 1503 million in 2021. A further rise is noted in 2022 to 1654 million, followed by a decline to 1434 million in 2023. However, 2024 shows a significant increase to 1847 million, which is the highest value in the period analyzed. This suggests increased cash tax payments in the latest year, potentially due to changes in taxable income recognition, tax prepayments, or adjustments of prior tax obligations.
Comparing the two metrics, cash operating taxes consistently remain above the reported tax expense for most years, with the gap widening notably in 2024. This divergence may indicate timing differences between tax expense recognition in financial statements and actual cash tax outflows. The variability and the recent increase in cash operating taxes could signal changes in tax policy, effective tax rates, or operational results impacting tax liabilities.
Invested Capital
Honeywell International Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of customer advances and deferred income.
5 Addition of obligations for product warranties and product performance guarantees.
6 Addition of repositioning reserves.
7 Addition of equity equivalents to total Honeywell shareowners’ equity.
8 Removal of accumulated other comprehensive income.
9 Subtraction of construction in progress.
10 Subtraction of available for sale investments.
The annual financial data reflects several significant trends concerning the company's debt levels, equity position, and overall invested capital.
- Total reported debt & leases
- There is a noticeable fluctuation in the total reported debt and leases over the five-year period. Starting from a relatively high level of 23,212 million USD at the end of 2020, the debt decreased to approximately 20,631 million USD in 2021 and remained fairly stable through 2022 at 20,537 million USD. In 2023, a slight increase to 21,536 million USD is observed. However, by the end of 2024, the debt surged markedly to 32,225 million USD, which represents a significant rise compared to previous years, indicating potential changes in financing strategy or increased borrowing.
- Total Honeywell shareowners’ equity
- The company's shareholders’ equity shows a more volatile but overall stable pattern. It initially increased from 17,549 million USD in 2020 to a peak of 18,569 million USD in 2021, followed by a decline to 16,697 million USD in 2022, and further down to a low of 15,856 million USD in 2023. By the end of 2024, equity recovered somewhat to 18,619 million USD, slightly surpassing the earlier peak. This fluctuation suggests periods of either retained earnings variation or equity adjustments, potentially influenced by market conditions and company performance.
- Invested capital
- The invested capital shows a gradual downward trend from 49,130 million USD in 2020 to a low of 47,332 million USD in 2022. It then moderately rebounds to 48,147 million USD in 2023 before exhibiting a substantial increase to 60,349 million USD in 2024. The sharp rise in invested capital in the final year correlates with the marked increase in debt, which may suggest the company has undertaken major investments financed predominantly through increased borrowing.
In summary, the data reveals that the company maintained relatively stable debt and equity figures between 2020 and 2023, with minor fluctuations. However, the year 2024 shows a pronounced increase in debt alongside a significant expansion in invested capital and a rebound in shareholder equity. These patterns may reflect strategic initiatives involving large-scale investments and changes in capital structure, indicating a more aggressive financial posture in the most recent year.
Cost of Capital
Honeywell International Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Honeywell International Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit demonstrates a fluctuating but overall negative trend during the period from 2020 to 2024. The value initially improves significantly from -1091 million US dollars in 2020 to -427 million US dollars in 2021. However, it then declines to -924 million in 2022, slightly improves again in 2023 to -477 million, and sharply worsens to -1758 million in 2024, indicating an increased economic loss in the most recent year.
- Invested Capital
- The invested capital exhibits a general pattern of fluctuation with an initial decrease, followed by growth. It begins at 49,130 million US dollars in 2020, decreases gradually to 47,332 million in 2022, then slightly rises to 48,147 million in 2023. A marked increase is observed in 2024, reaching 60,349 million, suggesting significant new capital investment or asset accumulation during that year.
- Economic Spread Ratio
- The economic spread ratio, which measures profitability relative to invested capital, remains negative throughout the evaluated period. It improves from -2.22% in 2020 to -0.88% in 2021, indicating a narrowing loss. Nevertheless, it deteriorates again to -1.95% in 2022, slightly improves to -0.99% in 2023, but experiences a significant decline to -2.91% in 2024. This reflects increasing inefficiency or lower returns on invested capital in the latest year.
- Overall Analysis
- Overall, the data suggests that despite increases in invested capital, the company has consistently generated negative economic profit, with a particularly adverse outcome in 2024. The economic spread ratio corroborates this by remaining negative and worsening in the final year. The fluctuations in economic profit and spread ratio imply challenges in converting investments into profitable returns. The significant rise in invested capital in 2024, coupled with deteriorating profitability metrics, indicates potential risks related to capital deployment efficiency or market conditions impacting financial performance.
Economic Profit Margin
Honeywell International Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in customer advances and deferred income | ||||||
| Adjusted net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Adjusted Net Sales
- The adjusted net sales displayed a consistent upward trend over the five-year period, increasing from $33,125 million in 2020 to $38,524 million in 2024. This steady growth indicates a positive revenue performance, with incremental annual gains suggesting expansion or improved market penetration.
- Economic Profit
- The economic profit figures reflect persistent negative values throughout the period, indicating that the company did not achieve economic profitability in any of the years analyzed. Although there were fluctuations, the profit losses deepened significantly in 2024, with a drop to -$1,758 million from relatively smaller losses in prior years. Notably, 2021 saw a lower loss compared to 2020, suggesting a temporary improvement, but this was not sustained in subsequent years.
- Economic Profit Margin
- The economic profit margin mirrored the trend of economic profit, remaining negative for all years. The margin improved marginally in 2021 and 2023 relative to 2020 and 2022 but deteriorated markedly in 2024, reaching -4.56%. This indicates a worsening efficiency or increased costs relative to revenue, despite growing sales.
- Overall Observations
- The overall financial performance suggests a scenario where increased sales did not translate into economic profitability, with economic profit margins consistently negative and declining sharply by 2024. The divergence between higher sales and worsening economic profit margins may call for an assessment of cost management, pricing strategies, or capital efficiency to improve the company's economic profitability in the future.