By Narrative Science Analysts expect higher profit for Honeywell International when the company reports its second quarter results on Friday, July 19, 2013. The consensus estimate is calling for profit of $1.22 a share, reflecting a rise from $1.14 per share a year ago. …read more
Source: FULL ARTICLE at Forbes Markets
Filed under: Investing
As an investor, it pays to follow the cash. If you figure out how a company moves its money, you might eventually find some of that cash flowing into your pockets.
In this series, we’ll highlight four companies in an industry, and compare their “cash king margins” over time, trying to determine which has the greatest likelihood of putting cash back in your pocket. After all, a company can pay dividends and buy back stock only after it’s actually received cash — not just when it books those accounting figments known as “profits.”
Today, let’s look at Honeywell International and three of its peers.
The cash king margin
Looking at a company’s cash flow statement can help you determine whether its free cash flow actually backs up its reported profit. Companies that can create 10% or more free cash flow from their revenue can be powerful compounding machines for your portfolio. A sustained high cash king margin can be a good predictor of long-term stock returns.
To find the cash king margin, divide the free cash flow from the cash flow statement by sales: cash king margin = free cash flow / sales
Let’s take McDonald’s as an example. In the four quarters ending in December, the restaurateur generated $6.97 billion in operating cash flow. It invested about $3.05 billion in property, plant, and equipment. To calculate free cash flow, subtract McDonald’s investment from its operating cash flow. That leaves us with $3.92 billion in free cash flow, which the company can save for future expenditures or distribute to shareholders.
Taking McDonald’s sales of $25.5 billion over the same period, we can figure that the company has a cash king margin of about 14% — a nice high number. In other words, for every dollar of sales, McDonald’s produces $0.14 in free cash.
Ideally, we’d like to see the cash king margin top 10%. The best blue chips can notch numbers greater than 20%, making them true cash dynamos. But some businesses, including many types of retailing, just can’t sustain such margins.
We’re also looking for companies that can consistently increase their margins over time, which indicates that their competitive position is improving. Erratic swings in margins could signal a deteriorating business, or perhaps some financial skullduggery; you’ll have to dig deeper to discover the reason.
Four companies
Here are the cash king margins for four industry peers over a few periods:
|
Company |
Cash King Margin (TTM) |
1 Year Ago |
3 Years Ago |
5 Years Ago |
|---|---|---|---|---|
|
Honeywell International |
7% |
5.6% |
11.1% |
9.1% |
|
BorgWarner |
6.6% |
4.4% |
4.5% |
5.8% |
|
Johnson Controls |
0.7% |
(1.7%) |
5% |
3.2% |
|
Exide Technologies |
James S. Brady Press Briefing Room
12:47 P.M. EDT
MR. CARNEY: Welcome to the White House. Sorry I'm late. Had some meetings that ran long. I do have something I want to say at the top.
I wanted to provide a quick update on the ongoing engagement with the business community and the President, First Lady, and senior members of the President’s team on a broad range of issues including the President’s economic agenda, immigration reform, cybersecurity, and issues important to our veterans and military families, to name a few.
As you know, the President today will be dropping by two separate meetings with business leaders this afternoon. The President will be attending a meeting with business leaders to discuss cybersecurity as a part of the administration’s ongoing dialogue with the private sector regarding this issue. Attendees include David Cote from Honeywell International, Wes Bush from Northrop Grumman Corporation, and Randall Stephenson from AT&T. A full list of attendees will be provided later this afternoon.
After that, he will attend a meeting with business leaders where he will discuss our efforts on immigration reform and its role in our broader economic agenda. Attendees of that meeting include Greg Brown from Motorola Solutions, Douglas Oberhelman from Caterpillar, and Virginia Rometty from IBM Corporation. Again, a full list of the participants in that meeting will be provided afterwards.
Finally, as part of the Joining Forces initiative, the First Lady delivered remarks earlier today at the quarterly meeting of member CEOs of the Business Roundtable, where she continued her call on the private sector to hire America’s veterans and military spouses, and she also called on them to help reach their full potential within America’s companies. Mrs. Obama made the case that it has never been more important to join together and help our veterans and military spouses find employment and to build their careers, especially with more than 1 million veterans who will be hanging up their uniforms and transitioning back to civilian life in the coming years.
Also this morning, senior staff, including Valerie Jarrett, Denis McDonough, Rob Nabors, met with members of the Business Roundtable executive committee to address a broad array of issues on the President’s agenda. And Treasury Secretary Jack Lew held a meeting yesterday with business leaders to discuss the President’s economic agenda, including Jim McNerney from Boeing, and Fred Smith from FedEx. I'd refer you to Treasury for the full list of attendees.
I do have one final note for the young among you in spirit or fact, and that is that Gene Sperling will be participating in an Ask Me Anything session on Reddit this afternoon at 2:00 p.m. (Laughter.) I think you should check it out. You will not regret it.
Q Awww.
MR. CARNEY: I'll take your questions now. Ask me anything. (Laughter.)
Q It sounds like yesterday the President was pushed during his meeting with Senate Democrats …read more
Source: White House Press Office
By DividendChannel.com In a study of analyst recommendations at the major brokerages, for the underlying components of the S&P 500, Newell Rubbermaid, Inc. (NYSE: NWL) has taken over the #35 spot from Honeywell International, Inc. (NYSE: HON), according to ETF Channel. Below is a chart of Newell Rubbermaid, Inc. versus Honeywell International, Inc. plotting their respective rank within the S&P 500 over time (NWL plotted in blue; HON plotted in green):
Source: FULL ARTICLE at Forbes Markets