DAC WEEK7 FINAL PROJECT

Abstract This report is an analysis of Honeywell Automation, Inc and the Standard and Poors 500 (S&P500). The S&P500 is a stock market index based on the market capitalizations of 500 large companies having common stock listed on the New York Stock Exchange or National Association of Securities Dealers Automated Quotations (NASDAQ). Company Overview of Honeywell Operating worldwide, Honeywell International Inc. is a diversified technology and manufacturing company. Founded in 1920, Honeywell International Inc. has their main headquarters in Morristown, New Jersey. [YAHOO, 2013] Honeywells Aerospace segment provides products for manufacturers, airlines, general aviation, military, space, and airport operations and general business, as well as offers management and technical, logistics, and repair and overhaul services. [YAHOO, 2013] Honeywells Automation and Control Solutions segment offers security and life safety products and services; process automation products and solutions; and building solutions and services for homes, buildings, and industrial facilities. [YAHOO, 2013] Honeywells Performance Materials and Technologies segment provides a wide variety of products for applications in an expansive array of industrial segments. It also provides products, technology, and services for the refining, processing, renewable energy and other industries. [YAHOO, 2013] Honeywells Transportation Systems segment offers parts and materials for passenger cars and commercial vehicles. [YAHOO, 2013]

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Honeywell Quick Facts Honeywell employs approximately ~132,000 employees worldwide. As of Nov 29, 2013, there are 784,673,000 shares outstanding There are 1,031 Institutions listed as shareholders in Honeywell Institutions own approximately 82% of the outstanding Honeywell shares Insiders own ~1.02m shares or ~.13% Beta is 1.34 (see figure 2) Gross Margin is 28.04% Net Margin 10.44% Current Ratio 1.32 Quick Ratio 1.01 Long-Term Debt to Equity 38.7% Competitors; o BorgWarner Inc. o Johnson Controls Inc. o UTX = United Technologies Corp.
9,647 6,942 Rev.-COGS --------------Revenue 28.04% Net income Net sales 1,007 9,647 Net Income --------------Revenue 10.44%

Net revenue Cost of Goods Sold

Gross Margin

Net Margin

Gross Margin

Net Margin

Long-term debt Total Common Equity

5,789 14,959 Long-term debt --------------Total Common Equity 38.70% 19,304 4455 14,663

Current Assets Current Liabilities

19,304 14,663 Current Assets --------------Current Liabilities 1.32

LT Debt to Equity

Current Ratio

LT Debt to Equity Current Assets Inventories Current Liabilities

Current Ratio

Quick Ratio

Current Assets - Inventories = --------------Current Liabilities = 1.01

Quick Ratio

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In comparing the Honeywell stock to the S&P500, we see that they follow a similar pattern when charted, see Figure 1.

Figure 1: Graphical comparison of the price of Honeywell stock compared to the S&P500 Index

Calculation of the correlation statistic will allow us to confirm this, see Figure 2.

Statistic Calculated Average return (annual): Standard deviation (annual): Minimum monthly return: Maximum monthly return: Correlation between HON and the market: Beta: bGE = rGE,M (s GE / s M) Beta (using the SLOPE function): Intercept (using the INTERCEPT function): R2 (using the RSQ function): 6.4% 14.7% -16.9% 10.8% 0.82 1.34 1.34 0.0044 0.67 All Market HON 120 57 63 13.9% 23.9% -26.7% 19.3%

Figure 2: Calculation of the correlation statistics show the Honeywell stock closely aligns with the S&P500 Index

We can also see the correlation graphically in Figure 3 on the next page.

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30.00%

20.00% y = 1.3358x + 0.0044 R = 0.6722 10.00% HON's Return 0.00% -20.00% -15.00% -10.00% -5.00% 0.00% -10.00% Market's Return 5.00% 10.00% 15.00%
Linear (HON's Return)

-20.00%

-30.00%

Figure 3: Graphical chart showing correlation of Honeywell stock and the S&P500 index

Stock Market Data for symbol HON [YAHOO, 2013]

Date Volume 10/18/2013 7,040,200 10/25/2013 2,747,700 11/1/2013 3,092,500 11/8/2013 2,741,500 11/15/2013 2,572,300 11/22/2013 1,914,600 11/29/2013 1,156,236
$91.00 $89.00 Initial Week1 $87.00 Week2 $85.00 Week3 Week4 $83.00 Week5 $81.00 Week6 Week7 $79.00 Final $77.00 $75.00 Initial Week1 Week2 Week3 Week4 Week5 Week6 Week7 Final

Open $ 85.71 $ 87.20 $ 86.77 $ 85.52 $ 88.28 $ 87.87 $ 88.83

High $ 85.94 $ 87.54 $ 87.77 $ 87.46 $ 88.77 $ 88.87 $ 89.16 Open $ $ $ $ $ $ $ 85.71 87.20 86.77 85.52 88.28 87.87 88.83

Low $ 83.70 $ 86.65 $ 86.54 $ 85.37 $ 88.21 $ 87.68 $ 88.39 Close $ $ $ $ $ $ $ 84.58 87.50 86.91 87.44 88.62 88.80 88.51

Close $ 84.58 $ 87.50 $ 86.91 $ 87.44 $ 88.62 $ 88.80 $ 88.51

Adj Close $ 84.15 $ 87.06 $ 86.47 $ 87.00 $ 88.17 $ 88.80 $ 88.51

Values Ends $ 85.71 $ 85.71 $ (1.13) $ 0.30 $ 0.14 $ 1.92 $ 0.34 $ 0.93 $ (0.32) $ 88.51

Figure 4: Weekly stock data for the symbol HON for the periods under study

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Week 1
$87.00 $86.50 $86.00 $85.50 $85.00 $84.50 $84.00 $83.50 $83.00 $82.50 $82.00

6
Week 2
$88.00 $87.00 $86.00 $85.00 $84.00 $83.00 $82.00

Week 3
$88.00 $87.00 $86.00 $85.00
$84.00 $83.00 $82.00

Week 4
$88.00 $87.00 $86.00 $85.00
$84.00 $83.00 $82.00

Week 5
$90.00 $89.00 $88.00 $87.00 $86.00 $85.00 $84.00 $83.00 $82.00

Week 6
$90.00 $89.00 $88.00 $87.00 $86.00 $85.00 $84.00 $83.00 $82.00

Week 7
$90.00 $89.00 $88.00 $87.00 $86.00 $85.00 $84.00 $83.00 $82.00

Period Summary
$90.00
$89.00 $88.00 $87.00 $86.00 $85.00 $84.00

$83.00 $82.00
Initial Week1 Week2 Week3 Week4 Week5 Week6 Week7 Final

Reviewing the weekly charts by day reveals the daily changes undertaken by HON. In week 1 we see a downward trend as some investors sell off ahead of the release of Honeywell Q# earnings report. However, in week 2 we see the stock has recovered with a strong week as Honeywell reports lower revenues than expectations but otherwise strong financials and an increase in the dividend on common stock. Week 3 thru 7 are relatively flat with small gain in weeks 3,4,5 and slight losses in weeks 6 and 7. Overall, the stock gained in a positive performance for the period. During this period insider trading was exclusively to sell. [HONEYWELL]

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S&P 500 Weekly Review for October 14, 2013 The S&P 500 registered its third successive gain, rising 0.7% to extend its weekly advance to 2.4%. Technology aside, the industrial sector ended as the only group with a gain larger than 1.0%. Treasuries changed little with the 10-yr yield at 2.59%. Aided by options, trading volume was running out as over 800 million shares changed hands in floor action at NYSE. [Briefing, 2013] S&P 500 Weekly Review for October 21, 2013 The S&P 500 finished the week at another all-time high, but there were enough praise to go around for the major indexes. Fittingly, the S&P 500 dashed into Friday's close, breaking out of a narrow trading range to close at its high for the session. Over the last 13 sessions, with the S&P 500 up 6.3%, it should not come as a surprise to anyone if it relents to profit-taking activity in the near term. [Briefing, 2013] S&P 500 Weekly Review for October 28, 2013 With an advance of 0.1%, the SP 500 added 0.3% to end the week, although the broader market changed little. With an opening climb, the SP slid to lows during the first two hours. The SP was able to combat its way back to the opening high, but could not

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muster additional gains. One good thing, the SP posted a modest advance on the relative strength of industrials and health care. [Briefing, 2013] S&P 500 Weekly Review for November 4, 2013 Advancing 1.3%, the SP 500 underperformed the Nasdaq and Russell 2000 with respective gains of 1.6% and 1.9%. Financial sector rallied stocks paving the way after the group struggled earlier in the week to keep pace with the SP. Tthe major averages ended on a mixed note Tuesday, as the SP 500 shed 0.3% while the Nasdaq added 0.1%.Wednesday saw the SP 500 register broad gains at the open, and end in positive territory. On Thursday, the SP 500 fell 1.3% while the underperforming Nasdaq declined 1.9%. [Briefing, 2013] S&P 500 Weekly Review for November 11, 2013 Registering its sixth consecutive weekly gain, the S&P 500 added 0.4%. Spending the bulk the day's session inside of a four-point range, the benchmark index experienced the now-familiar final-hour rally that sent the index to 1798.18, a fresh record high. On Tuesday, the S&P 500 shed 0.2%. Steadily selling off, through the first four hours of action, the index managed to regain most of its losses by the close. Wednesday, the Nasdaq outperformed with an advance of 0.7%, while the S&P 500 rise 0.4%. The S&P 500 added 0.5% with the focus on Washington Thursday, where all eyes was on Janet Yellen appearing for her confirmation hearing in front of the Senate Banking Committee. Comments by Ms. Yellen strengthened the belief that there will not be any hurry to reduce the pace of asset purchases by the central bank. [Briefing, 2013] S&P 500 Weekly Review for November 18, 2013

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Scoring its seventh straight weekly gain, the S&P 500 also established a new record closing high. Janet Yellen's confirmation was another key happening, it appears imminent she will be the next Fed chairman after the thumbs up from the Senate Banking Committee this week. [Briefing, 2013] S&P 500 Weekly Review for November 25, 2013 Managing to secure its eighth consecutive weekly advance, the S&P 500 shed 0.1%. The benchmark index gained 0.1% in the final week of November. In weekly trading, the S&P 500 suffered from late weakness, as financials and industrials tumbled into the red, surrendering its entire gain during the final 30 minutes with most other sectors following suit. [Briefing, 2013]

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10

References

Honeywell International, Inc

Investor Home: Investor News: Fundamentals: SEC Filings: Balance Sheet: Income Statement: Cash Flow: http://investor.honeywell.com/phoenix.zhtml?c=94774&p=irol-irhome http://investor.honeywell.com/phoenix.zhtml?c=94774&p=irol-news http://investor.honeywell.com/phoenix.zhtml?c=94774&p=irol-fundTrading http://investor.honeywell.com/phoenix.zhtml?c=94774&p=irol-sec http://investor.honeywell.com/phoenix.zhtml?c=94774&p=irol-fundBalanceA http://investor.honeywell.com/phoenix.zhtml?c=94774&p=irol-fundIncomeA http://investor.honeywell.com/phoenix.zhtml?c=94774&p=irol-fundCashFlowA

Yahoo
Business Summary: Pricing Data: Honeywell S&P 500 http://finance.yahoo.com/q/hp?s=HON+Historical+Prices http://finance.yahoo.com/q/hp?s=%5EGSPC+Historical+Prices http://finance.yahoo.com/q/it?s=HON+Insider+Transactions http://finance.yahoo.com/q/pr?s=HON.L

Insider Transactions:

Miscellaneous
Stock News: http://briefing.com/investor/markets/weekly-wrap/

Institutional Holdings: http://www.nasdaq.com/symbol/hon/institutional-holdings