Stock Analysis on Net

Honeywell International Inc. (NASDAQ:HON)

$19.99

Economic Value Added (EVA)

Microsoft Excel LibreOffice Calc

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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Economic Profit

Honeywell International Inc., economic profit calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Honeywell International Inc. economic profit decreased from 2019 to 2020 but then slightly increased from 2020 to 2021.

Net Operating Profit after Taxes (NOPAT)

Honeywell International Inc., NOPAT calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net income attributable to Honeywell
Deferred income tax expense (benefit)1
Increase (decrease) in allowances2
Increase (decrease) in LIFO reserve3
Increase (decrease) in customer advances and deferred income4
Increase (decrease) in obligations for product warranties and product performance guarantees5
Increase (decrease) in repositioning reserves6
Increase (decrease) in equity equivalents7
Interest and other financial charges
Interest expense, operating lease liability8
Adjusted interest and other financial charges
Tax benefit of interest and other financial charges9
Adjusted interest and other financial charges, after taxes10
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income11
Investment income, after taxes12
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowances.

3 Addition of increase (decrease) in LIFO reserve. See details »

4 Addition of increase (decrease) in customer advances and deferred income.

5 Addition of increase (decrease) in obligations for product warranties and product performance guarantees.

6 Addition of increase (decrease) in repositioning reserves.

7 Addition of increase (decrease) in equity equivalents to net income attributable to Honeywell.

8 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

9 2021 Calculation
Tax benefit of interest and other financial charges = Adjusted interest and other financial charges × Statutory income tax rate
= × 21.00% =

10 Addition of after taxes interest expense to net income attributable to Honeywell.

11 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

12 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Honeywell International Inc. NOPAT decreased from 2019 to 2020 but then slightly increased from 2020 to 2021.

Cash Operating Taxes

Honeywell International Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Tax expense
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest and other financial charges
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Honeywell International Inc. cash operating taxes increased from 2019 to 2020 and from 2020 to 2021.

Invested Capital

Honeywell International Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Commercial paper and other short-term borrowings
Current maturities of long-term debt
Long-term debt, excluding current maturities
Operating lease liability1
Total reported debt & leases
Total Honeywell shareowners’ equity
Net deferred tax (assets) liabilities2
Allowances3
LIFO reserve4
Customer advances and deferred income5
Obligations for product warranties and product performance guarantees6
Repositioning reserves7
Equity equivalents8
Accumulated other comprehensive (income) loss, net of tax9
Redeemable noncontrolling interest
Noncontrolling interest
Adjusted total Honeywell shareowners’ equity
Construction in progress10
Available for sale investments11
Invested capital

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

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 LIFO reserve. See details »

5 Addition of customer advances and deferred income.

6 Addition of obligations for product warranties and product performance guarantees.

7 Addition of repositioning reserves.

8 Addition of equity equivalents to total Honeywell shareowners’ equity.

9 Removal of accumulated other comprehensive income.

10 Subtraction of construction in progress.

11 Subtraction of available for sale investments.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Honeywell International Inc. invested capital increased from 2019 to 2020 but then slightly decreased from 2020 to 2021.

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: 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 »

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: 2019-12-31).

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: 2018-12-31).

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 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (reporting date: 2017-12-31).

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

Microsoft Excel LibreOffice Calc
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
3M Co.
Boeing Co.
Caterpillar Inc.
General Electric Co.
Lockheed Martin Corp.
Raytheon Technologies Corp.

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Honeywell International Inc. economic spread ratio deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.

Economic Profit Margin

Honeywell International Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
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
3M Co.
Boeing Co.
Caterpillar Inc.
General Electric Co.
Lockheed Martin Corp.
Raytheon Technologies Corp.

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 Economic profit. See details »

2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × ÷ =

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Honeywell International Inc. economic profit margin deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.