Stock Analysis | Honeywell Outlook - Technical Weakness Overshadows Mixed Analyst and Fund-Flow Signals

Honeywell Outlook - Technical Weakness Overshadows Mixed Analyst and Fund-Flow Signals

Market Snapshot: Honeywell (HON) is currently rising by 0.51%, but the technical outlook is weak with a score of just 1.75 (internal diagnostic score, 0-10).

News Highlights

Recent news surrounding Honeywell and the broader economy has been mixed. The U.S. government's new approach to approving and recommending updated vaccines has generated uncertainty in the broader market, potentially affecting sectors like industrial and manufacturing. Additionally, a planned industrial action at Helsinki Airport led Finnair to cancel 50 flights, impacting European travel and possibly industrial logistics. Meanwhile, Entergy announced a $498 million investment in new infrastructure for two industrial clients in Louisiana, signaling optimism for the industrial sector. However, these developments may not be enough to offset the bearish technical signals affecting HON.

Analyst Views & Fundamentals

Average Analyst Rating: The simple average of analyst ratings stands at 3.25, with a performance-weighted (historical accuracy) average of 4.54. Analysts from top-tier firms like Barclays, Wells Fargo, and Morgan Stanley are active, but their views are not fully aligned—three out of four recent ratings are Neutral, with only one Buy call. This suggests disagreement among analysts.

Analyst Performance: Joseph O’Dea from Wells Fargo has a strong track record with a 75.0% win rate over 8 predictions, while Barclays’ Julian Mitchell has a 60.0% win rate across 10 predictions. Morgan Stanley’s Chris Snyder, though with fewer predictions, boasts a perfect 100.0% win rate over 3 forecasts. These high-performing analysts are issuing cautious to neutral outlooks, which aligns with the weak technical outlook for HON.

Key Fundamentals (values in brackets):

• Price to Cash Flow (PCF): 134.56 (score: 10.34/10)
• Price to Earnings (PE): 113.12 (score: 16.88/10)
• Net Income / Revenue: 0.56% (score: 10.50/10)
• Annualized ROE: 34.79% (score: 0.00/10)
• Net Assets per Share (growth YOY): -11.53% (score: 3.61/10)
• Net Cash Flow (YOY): 5.33% (score: 3.22/10)

Though the firm has strong PCF and PE metrics (high scores), its ROE is a concern at 34.79%, with the lowest model score. Negative asset growth and low net cash flow growth further add to the mixed fundamental picture.

Money-Flow Trends

Honeywell’s recent fund-flow data shows mixed activity. While large- and extra-large-cap investors are showing positive inflow trends (49–53% inflow ratios), smaller investors and medium-sized funds are showing more negative inflow patterns. Specifically:

• Extra-large funds: 53.31% inflow (positive trend)
• Small funds: 49.08% inflow (negative trend)
• Overall fund flow score: 7.62 (internal diagnostic score, 0-10), with a positive overall trend and positive block flow at 51.67%.

This suggests that while larger institutions are showing cautious optimism, retail and smaller funds are less convinced—possibly reflecting uncertainty due to the bearish technical signals and mixed analyst outlooks.

Key Technical Signals

Honeywell's technical indicators are largely bearish, with 4 out of 4 signals leaning negatively and 0 bullish indicators in the recent 5-day period. The technical score is 1.75 (internal diagnostic score, 0-10), with a weak overall trend and a recommendation to avoid the stock.

Key recent indicators:

• WR Oversold: Score: 3.99 (internal diagnostic score) – shows a neutral to slightly bullish signal.
• Ex-Dividend Date: Score: 1.00 (internal diagnostic score) – strongly bearish with a historical average return of -0.77% and 0% win rate.
• Dividend Record Date: Score: 1.00 (internal diagnostic score) – similarly bearish.
• Bullish Engulfing: Score: 1.00 (internal diagnostic score) – expected to fail historically with -1.32% average return and only 30% win rate.

These signals, particularly around dividend events and bearish candle patterns, suggest a high risk of short-term price decline. Recent chart patterns like WR Oversold on August 8, 11, and 7 show some buying pressure, but it has not been enough to counter the strong bearish momentum.

Conclusion

Despite positive inflows from larger institutions and mixed but not overly negative fundamentals, Honeywell’s technical outlook is clearly bearish with no bullish indicators and 4 bearish signals in the last 5 days. With a technical score of 1.75 (internal diagnostic score), we recommend investors consider avoiding the stock for now. The mixed analyst ratings and recent bearish chart signals suggest the risk-reward balance is skewed toward the downside.