On April 17th, Honeywell International (HON) reported Q1 earnings per share of $1.41 vs the Wall Street consensus estimate of $1.39 on revenue of $9.21B vs the $9.50B estimate. This was down 4.8% year over year, but the $83B industrial conglomerate saw margins tick higher by 220 basis points to 18.7%.
Honeywell pays a nice dividend of just under 2 percent. Also notable is that CEO David Cote has said that they plan on spending around $10 Billion on mergers & acquisitions by 2018. With nearly $9 Billion in cash and short-term investments I am expecting a couple of deals later this year as the overall M&A market has been heating up.
Honeywell stock trades at a Price to Earnings (P/E) ratio of 17.5 (using 2015 estimates), price to sales ratio of 2.05, and a price to book ratio of 4.65. On April 28th, Oppenheimer reiterated their outperform rating with a price target of $117/share.
Honeywell Stock Chart – Is a breakout in the works?
Options Trade Ideas – Honeywell International (HON)
These are simply ideas that I am looking at. As with any trade they involve risk and traders need to create a plan to manage the risk.
- Buy the (HON) June $105/$110 bull call spread for a $2.05 debit or better
This would include buying the June $105 call and selling the June $110 call, all in one trade
Stop loss- None
1st upside target- $4.00
2nd upside target- $4.95
Or
- Buy the (HON) June $105/$110/$115 call butterfly for a $1.65 debit or better
This would include buying 1 June $105 call, selling 2 June $110 calls, buying 1 June $115 call, all in one trade
Stop loss- None
1st upside target- $3.30 or a move to $110 in the stock
2nd upside target- $4.90
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No position in any of the securities mentioned at the time of publication. Â Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
