Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Honeywell International Inc. (NYSE:HON)

Analysis of Income Taxes

Advanced level

Income Tax Expense (Benefit)

Honeywell International Inc., income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
U.S. Federal (21) 2,061  869  786 
U.S. State 43  89  62  97  78 
Non-U.S. 1,099  1,177  787  559  560 
Current 1,150  1,245  2,910  1,525  1,424 
U.S. Federal 332  396  39  38  196 
U.S. State 63  132  17  49 
Non-U.S. (216) (990) 2,123  21  70 
Deferred 179  (586) 2,294  76  315 
Tax expense 1,329  659  5,204  1,601  1,739 

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Honeywell International Inc.’s current decreased from 2017 to 2018 and from 2018 to 2019.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Honeywell International Inc.’s deferred decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.
Tax expense Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Honeywell International Inc.’s tax expense decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.

Effective Income Tax Rate (EITR)

Honeywell International Inc., effective income tax rate (EITR) reconciliation

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
U.S. federal statutory income tax rate 21.00% 21.00% 35.00% 35.00% 35.00%
Taxes on non-U.S. earnings -0.50% 0.20% -12.90% -8.00% -8.00%
U.S. state income taxes 1.10% 1.60% 1.40% 1.10% 1.20%
Reserves for tax contingencies 2.00% 0.30% 1.60% 1.20% 0.70%
Employee share-based payments -1.20% -0.70% -2.90% -2.00% 0.00%
Reduction of taxes on unremitted earnings 0.00% -14.20% 0.00% 0.00% 0.00%
Separation tax costs 0.00% 5.50% 0.00% 0.00% 0.00%
All other items, net -1.20% 0.90% -1.20% -2.50% -2.50%
Effective income tax rate, before U.S. Tax Reform 21.20% 14.60% 21.00% 24.80% 26.40%
U.S. Tax Reform -3.60% -5.80% 54.40% 0.00% 0.00%
Effective income tax rate 17.60% 8.80% 75.40% 24.80% 26.40%

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

Item Description The company
Effective income tax rate, before U.S. Tax Reform Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Honeywell International Inc.’s effective income tax rate, before U.S. Tax Reform decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Components of Deferred Tax Assets and Liabilities

Honeywell International Inc., components of deferred tax assets and liabilities

US$ in millions

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Pension —  —  —  411  500 
Postretirement benefits other than pensions 111  120  177  262  292 
Asbestos and environmental 531  589  325  471  473 
Employee compensation and benefits 205  262  218  418  387 
Other accruals and reserves 279  336  376  765  626 
Net operating and capital losses 652  688  632  669  620 
Tax credit carryforwards 246  154  510  206  198 
Gross deferred tax assets 2,024  2,149  2,238  3,202  3,096 
Valuation allowance (656) (689) (663) (621) (589)
Deferred tax assets 1,368  1,460  1,575  2,581  2,507 
Pension (469) (40) (40) —  — 
Property, plant and equipment (469) (422) (439) (560) (661)
Intangibles (1,296) (1,553) (1,326) (1,843) (1,797)
Unremitted earnings of foreign subsidiaries (419) (616) (2,151) (43) — 
Other asset basis differences (136) (110) (210) (231) (293)
Other (163) (50) (67) (43) (31)
Deferred tax liabilities (2,952) (2,791) (4,233) (2,720) (2,782)
Net deferred tax asset (liability) (1,584) (1,331) (2,658) (139) (275)

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

Item Description The company
Gross deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Honeywell International Inc.’s gross deferred tax assets decreased from 2017 to 2018 and from 2018 to 2019.
Deferred tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Honeywell International Inc.’s deferred tax assets decreased from 2017 to 2018 and from 2018 to 2019.
Net deferred tax asset (liability) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Honeywell International Inc.’s net deferred tax asset (liability) increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.

Deferred Tax Assets and Liabilities, Classification

Honeywell International Inc., deferred tax assets and liabilities, classification

US$ in millions

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Deferred tax assets 86  382  236  347  283 
Deferred tax liabilities 1,670  1,713  2,894  486  558 

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

Item Description The company
Deferred tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Honeywell International Inc.’s deferred tax assets increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.
Deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Honeywell International Inc.’s deferred tax liabilities decreased from 2017 to 2018 and from 2018 to 2019.

Adjustments to Financial Statements: Removal of Deferred Taxes

Honeywell International Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported) 58,679  57,773  59,387  54,146  49,316 
Less: Noncurrent deferred tax assets, net 86  382  236  347  283 
Total assets (adjusted) 58,593  57,391  59,151  53,799  49,033 
Adjustment to Total Liabilities
Total liabilities (as reported) 39,966  39,408  41,943  34,596  30,608 
Less: Noncurrent deferred tax liabilities, net 1,670  1,713  2,894  486  558 
Total liabilities (adjusted) 38,296  37,695  39,049  34,110  30,050 
Adjustment to Total Honeywell Shareowners’ Equity
Total Honeywell shareowners’ equity (as reported) 18,494  18,180  17,276  19,369  18,283 
Less: Net deferred tax assets (liabilities) (1,584) (1,331) (2,658) (139) (275)
Total Honeywell shareowners’ equity (adjusted) 20,078  19,511  19,934  19,508  18,558 
Adjustment to Net Income Attributable To Honeywell
Net income attributable to Honeywell (as reported) 6,143  6,765  1,655  4,809  4,768 
Add: Deferred income tax expense (benefit) 179  (586) 2,294  76  315 
Net income attributable to Honeywell (adjusted) 6,322  6,179  3,949  4,885  5,083 

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).


Honeywell International Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Honeywell International Inc., adjusted financial ratios

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net Profit Margin
Reported net profit margin 16.73% 16.18% 4.08% 12.24% 12.36%
Adjusted net profit margin 17.22% 14.78% 9.74% 12.43% 13.17%
Total Asset Turnover
Reported total asset turnover 0.63 0.72 0.68 0.73 0.78
Adjusted total asset turnover 0.63 0.73 0.69 0.73 0.79
Financial Leverage
Reported financial leverage 3.17 3.18 3.44 2.80 2.70
Adjusted financial leverage 2.92 2.94 2.97 2.76 2.64
Return on Equity (ROE)
Reported ROE 33.22% 37.21% 9.58% 24.83% 26.08%
Adjusted ROE 31.49% 31.67% 19.81% 25.04% 27.39%
Return on Assets (ROA)
Reported ROA 10.47% 11.71% 2.79% 8.88% 9.67%
Adjusted ROA 10.79% 10.77% 6.68% 9.08% 10.37%

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Honeywell International Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Honeywell International Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Honeywell International Inc.’s adjusted financial leverage ratio decreased from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Honeywell International Inc.’s adjusted ROE improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Honeywell International Inc.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.

Honeywell International Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Honeywell 6,143  6,765  1,655  4,809  4,768 
Net sales 36,709  41,802  40,534  39,302  38,581 
Profitability Ratio
Net profit margin1 16.73% 16.18% 4.08% 12.24% 12.36%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Honeywell 6,322  6,179  3,949  4,885  5,083 
Net sales 36,709  41,802  40,534  39,302  38,581 
Profitability Ratio
Adjusted net profit margin2 17.22% 14.78% 9.74% 12.43% 13.17%

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

2019 Calculations

1 Net profit margin = 100 × Net income attributable to Honeywell ÷ Net sales
= 100 × 6,143 ÷ 36,709 = 16.73%

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Honeywell ÷ Net sales
= 100 × 6,322 ÷ 36,709 = 17.22%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Honeywell International Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net sales 36,709  41,802  40,534  39,302  38,581 
Total assets 58,679  57,773  59,387  54,146  49,316 
Activity Ratio
Total asset turnover1 0.63 0.72 0.68 0.73 0.78
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales 36,709  41,802  40,534  39,302  38,581 
Adjusted total assets 58,593  57,391  59,151  53,799  49,033 
Activity Ratio
Adjusted total asset turnover2 0.63 0.73 0.69 0.73 0.79

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

2019 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 36,709 ÷ 58,679 = 0.63

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 36,709 ÷ 58,593 = 0.63

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Honeywell International Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 58,679  57,773  59,387  54,146  49,316 
Total Honeywell shareowners’ equity 18,494  18,180  17,276  19,369  18,283 
Solvency Ratio
Financial leverage1 3.17 3.18 3.44 2.80 2.70
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 58,593  57,391  59,151  53,799  49,033 
Adjusted total Honeywell shareowners’ equity 20,078  19,511  19,934  19,508  18,558 
Solvency Ratio
Adjusted financial leverage2 2.92 2.94 2.97 2.76 2.64

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

2019 Calculations

1 Financial leverage = Total assets ÷ Total Honeywell shareowners’ equity
= 58,679 ÷ 18,494 = 3.17

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Honeywell shareowners’ equity
= 58,593 ÷ 20,078 = 2.92

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Honeywell International Inc.’s adjusted financial leverage ratio decreased from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Honeywell 6,143  6,765  1,655  4,809  4,768 
Total Honeywell shareowners’ equity 18,494  18,180  17,276  19,369  18,283 
Profitability Ratio
ROE1 33.22% 37.21% 9.58% 24.83% 26.08%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Honeywell 6,322  6,179  3,949  4,885  5,083 
Adjusted total Honeywell shareowners’ equity 20,078  19,511  19,934  19,508  18,558 
Profitability Ratio
Adjusted ROE2 31.49% 31.67% 19.81% 25.04% 27.39%

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

2019 Calculations

1 ROE = 100 × Net income attributable to Honeywell ÷ Total Honeywell shareowners’ equity
= 100 × 6,143 ÷ 18,494 = 33.22%

2 Adjusted ROE = 100 × Adjusted net income attributable to Honeywell ÷ Adjusted total Honeywell shareowners’ equity
= 100 × 6,322 ÷ 20,078 = 31.49%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Honeywell International Inc.’s adjusted ROE improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Honeywell 6,143  6,765  1,655  4,809  4,768 
Total assets 58,679  57,773  59,387  54,146  49,316 
Profitability Ratio
ROA1 10.47% 11.71% 2.79% 8.88% 9.67%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Honeywell 6,322  6,179  3,949  4,885  5,083 
Adjusted total assets 58,593  57,391  59,151  53,799  49,033 
Profitability Ratio
Adjusted ROA2 10.79% 10.77% 6.68% 9.08% 10.37%

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

2019 Calculations

1 ROA = 100 × Net income attributable to Honeywell ÷ Total assets
= 100 × 6,143 ÷ 58,679 = 10.47%

2 Adjusted ROA = 100 × Adjusted net income attributable to Honeywell ÷ Adjusted total assets
= 100 × 6,322 ÷ 58,593 = 10.79%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Honeywell International Inc.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.