Honeywell (HON) & Curtiss-Wright to Boost Aviation Safety

Honeywell International Inc. HON recently entered into a partnership with Curtiss-Wright Corp. to develop a new generation of cockpit voice and flight-data recorders (CVR/FDR), commonly known as the “black box”. The partnership will enable investigators, aircraft manufacturers, regulatory agencies and airlines to ascertain the cause of accident, thereby making aviation more secure. Notably, Curtiss-Wright will serve as the exclusive supplier of Honeywell's recorders for the business aviation and air transport markets.

The latest recorders will provide operators, manufacturers and owners of aircrafts with crucial aircraft data, which will help them improve maintenance and operational insight. Also, with the recorders, accident investigators will gain easy and quick access to the data on board during emergencies.

Notably the collaboration will see both the companies jointly inventing the hardware for the latest black boxes. Per the deal, Honeywell will work on renovating the software capabilities of the recorders, which will facilitate easier access to real-time data in flight hours. With this, operators, manufacturers as well as owners will gain new cockpit voice as well as flight data recording options that will enable them to reduce aircraft downtime. In addition, Honeywell's Connected Aircraft software will offer operators with real-time information streaming and server storage capabilities. As a matter of fact, the latest CVR and FDR, branded as Honeywell Connected Recorder-25, will comply with the upcoming 25-hour cockpit voice recording mandates.

Moreover, the company’s board of directors approved payment of a quarterly cash dividend of 82 cents per share to shareholders of record as on Feb 22, 2019. The payment will be made on Mar 8, 2019.

Existing Business Scenario

Honeywell is experiencing strong global demand for sensors, guidance systems, original equipment shipment volumes as well as higher spares volumes. Moving ahead, the company expects that greater operational excellence, stock buybacks and corporate tax benefits will continue to drive profitability.

Over the past year, this Zacks Rank #3 (Hold) company's shares have gained 0.2% against 8% decline recorded by the industry.

However, the company is currently dealing with rising costs of sales. Notably, in 2018, the company's cost of sales increased 5.3% year over year. Honeywell is currently experiencing inflation in a number of areas like material and labor inflation. Also, high research and development costs could also be a drag on the Aerospace segment's profitability.

Stocks to Consider

Some better-ranked stocks in the same space are Carlisle Companies Incorporated CSL, United Technologies Corporation UTX and HC2 Holdings, Inc. HCHC. While Carlisle sports a Zacks Rank #1 (Strong Buy), United Technologies and HC2 Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Carlisle pulled off average positive earnings surprise of 11.90% in the trailing four quarters.

United Technologies delivered average earnings surprise of 14.87% in the trailing four quarters.

HC2 Holdings’ earnings surprise in the last reported quarter was 111.90%.

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