Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- 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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Return on Invested Capital (ROIC)
Honeywell International Inc., ROIC 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, 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 NOPAT. See details »
2 Invested capital. See details »
3 2024 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes demonstrated fluctuations over the examined period. It increased from $5,376 million in 2020 to $5,961 million in 2021, indicating a positive growth trend in operating profitability. However, in 2022, NOPAT decreased to $5,460 million before recovering to $5,956 million in 2023 and slightly rising to $5,978 million in 2024. Overall, despite some volatility, the NOPAT remained relatively stable with a moderate upward trend towards the end of the period.
- Invested Capital
- Invested capital exhibited a declining trend from $49,130 million in 2020 to $47,332 million in 2022, suggesting a reduction in the capital base during this timeframe. This trend reversed in 2023 when invested capital increased slightly to $48,147 million, followed by a significant rise to $60,349 million in 2024. The marked increase in 2024 indicates a substantial expansion in the capital invested in the business.
- Return on Invested Capital (ROIC)
- The return on invested capital fluctuated in line with changes in NOPAT and invested capital. Starting at 10.94% in 2020, ROIC improved to 12.33% in 2021, reflecting better efficiency in capital utilization. After a dip to 11.54% in 2022, it rose again to 12.37% in 2023. However, there was a notable decline to 9.91% in 2024, likely influenced by the significant increase in invested capital outpacing growth in NOPAT during that year. This decline suggests decreased capital efficiency despite the higher asset base.
- Summary
- Overall, the company experienced moderate growth in operating profitability with some year-to-year variation. The invested capital contraction in the early years was followed by a substantial increase in the final year, which coincided with a notable decrease in the return on invested capital. This suggests that while the company expanded its asset base considerably in the latest period, it has yet to fully translate that investment into proportional profitability gains, indicating potential challenges in capital efficiency or ongoing investments with longer-term payoffs.
Decomposition of ROIC
Honeywell International Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin experienced an increase from 20.4% in 2020 to a peak of 21.58% in 2021, followed by a decline to 19.83% in 2022. After this dip, the margin showed a modest recovery to 20.28% in 2023 and remained stable at 20.31% in 2024. Overall, the OPM demonstrates relative stability with minor fluctuations, suggesting consistent operational efficiency over the period.
- Turnover of Capital (TO)
- The turnover of capital ratio rose steadily from 0.67 in 2020 to 0.76 in 2022 and maintained this level in 2023. However, there was a marked decline to 0.64 in 2024. This pattern indicates improving asset utilization through 2022 and 2023, followed by a reduction in efficiency in 2024.
- 1 – Effective Cash Tax Rate (CTR)
- The measure labeled as 1 minus the effective cash tax rate fluctuated over the five-year period. It increased slightly from 79.57% in 2020 to 79.87% in 2021, declined to 76.75% in 2022, peaked again at 80.59% in 2023, and dropped to 76.4% in 2024. These variations suggest inconsistent effective cash tax impacts affecting net profitability across years.
- Return on Invested Capital (ROIC)
- The return on invested capital showed improvement from 10.94% in 2020 to 12.33% in 2021 but then declined to 11.54% in 2022. In 2023, ROIC rebounded to 12.37%, reaching its highest point within the period. Nevertheless, 2024 experienced a notable decrease to 9.91%, the lowest in the five-year span. This indicates fluctuating effectiveness in generating returns from capital investments, with a concerning downturn in the most recent year.
Operating Profit Margin (OPM)
Honeywell International Inc., OPM 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in customer advances and deferred income | ||||||
| Adjusted net sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes demonstrates a generally positive trend from 2020 through 2024. The figure increased from $6,756 million in 2020 to $7,464 million in 2021, reflecting strong profit growth. Although there was a slight decline in 2022 to $7,114 million, the profit rebounded in 2023 to $7,390 million and further improved in 2024 to $7,825 million. This pattern indicates resilience and an overall upward trajectory in operating profitability over the five-year period.
- Adjusted Net Sales
- Adjusted net sales show a steady increase across the entire observed timeframe. The sales revenue rose from $33,125 million in 2020 to $38,524 million in 2024. The most notable increments occurred each year, with continuous growth that suggests effective sales expansion and possibly increased market demand or successful business strategies contributing to consistent revenue enhancement.
- Operating Profit Margin (OPM)
- The operating profit margin experienced some variability throughout the period. It improved from 20.4% in 2020 to a peak of 21.58% in 2021, indicating enhanced operational efficiency or favorable cost management that year. However, this margin declined to 19.83% in 2022, suggesting increased costs or pricing pressures. A partial recovery followed in 2023 and 2024, with margins stabilizing around 20.3%. Overall, the margin remained within a relatively narrow range but showed signs of maintaining profitability despite fluctuations.
Turnover of Capital (TO)
Honeywell International Inc., TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in customer advances and deferred income | ||||||
| Adjusted net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, 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 Invested capital. See details »
2 2024 Calculation
TO = Adjusted net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Net Sales
- The adjusted net sales demonstrate a consistent upward trend over the five-year period. Starting at $33,125 million in 2020, sales increased steadily each year, reaching $38,524 million in 2024. This represents an overall growth of approximately 16.3%, indicating a positive sales trajectory and potential market expansion or improved pricing strategies.
- Invested Capital
- Invested capital exhibits a relatively stable pattern from 2020 through 2023, fluctuating within a narrow range ($49,130 million in 2020 to $48,147 million in 2023). However, in 2024, there is a significant increase to $60,349 million, marking a substantial capital investment or acquisition. This jump could imply strategic asset growth or expansion in operations.
- Turnover of Capital (TO)
- The turnover of capital ratio improves moderately from 0.67 in 2020 to 0.76 by 2022 and remains stable at 0.76 in 2023. However, it declines noticeably to 0.64 in 2024. The initial improvement suggests enhanced efficiency in using capital to generate sales up to 2023, while the 2024 decline may reflect the impact of the significant increase in invested capital without a commensurate immediate increase in sales.
- Overall Insights
- The company shows strong sales growth alongside stable capital utilization efficiency until 2023. The marked increase in invested capital in 2024, while potentially positive for long-term capacity, currently corresponds with a drop in capital turnover, signaling a temporary reduction in capital efficiency. Continuous monitoring will be necessary to assess whether this capital deployment will translate into future sales growth and improved turnover ratios.
Effective Cash Tax Rate (CTR)
Honeywell International Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, 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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data analyzed reveals several key trends over the five-year period. The net operating profit before taxes (NOPBT) demonstrates a generally positive trajectory, increasing from $6,756 million in 2020 to $7,825 million in 2024. While there was a slight decline in 2022, the overall trend is upward, indicating sustained profitability before tax obligations.
Cash operating taxes paid exhibit a similar growth pattern, rising from $1,380 million in 2020 to $1,847 million in 2024. However, the trend is somewhat more volatile, with a notable dip in 2023 to $1,434 million before increasing sharply in 2024. This fluctuation suggests variability in either tax planning strategies, taxable income recognition, or tax policy impacts during this period.
The effective cash tax rate (CTR) shows variability without a consistent trend, fluctuating between 19.41% and 23.6%. The rate peaked in 2022 at 23.25%, then dropped to 19.41% in 2023 before rising again to 23.6% in 2024. This instability indicates changes in tax rates, tax efficiency, or the influence of tax credits and deductions that affect the overall tax burden relative to pre-tax profits.
- Net operating profit before taxes (NOPBT)
- Increased overall with minor fluctuations; highest value recorded in 2024 at $7,825 million.
- Cash operating taxes
- General upward trend with a decrease in 2023; sharp increase following in 2024.
- Effective cash tax rate (CTR)
- Varied within a range of approximately 19% to 24%, indicating inconsistency in tax rates or tax handling.
In conclusion, the analysis suggests that while operating profitability before taxes has improved consistently, tax expenses and rates have shown more fluctuation, leading to varying tax impacts on net returns across the years. The changes in the effective tax rate hint at underlying shifts in tax strategy or external tax environment factors influencing cash tax obligations.