DCF Studio

    HONA · NMS · Industrials

    Honeywell Aerospace Inc.

    Also onConsensus Drift

    Implied value per share

    USD 191.11

    Market price

    USD 157.95

    Implied upside

    +21.0%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedOnly 3 year(s) of history available to anchor assumptions on.
    AdjustedCapital expenditure runs at 3.0% of revenue against depreciation of 2.3%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 191.11+21.0%
    Exit multiple
    USD 214.20+35.6%
    Market price
    USD 157.95

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn5bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 18.4bnUSD 19.8bnUSD 21.1bnUSD 22.3bnUSD 23.6bnUSD 24.7bnUSD 25.7bnUSD 26.7bnUSD 27.5bnUSD 28.2bn+4.8%
    EBITUSD 4.1bnUSD 4.4bnUSD 4.7bnUSD 5.0bnUSD 5.3bnUSD 5.5bnUSD 5.8bnUSD 6.0bnUSD 6.2bnUSD 6.3bn+4.8%
    NOPATUSD 3.5bnUSD 3.7bnUSD 4.0bnUSD 4.2bnUSD 4.4bnUSD 4.6bnUSD 4.8bnUSD 5.0bnUSD 5.2bnUSD 5.3bn+4.8%
    Add depreciation & amortisationUSD 418.0mUSD 448.0mUSD 477.6mUSD 506.3mUSD 533.8mUSD 559.6mUSD 583.4mUSD 604.8mUSD 623.5mUSD 639.1m+4.8%
    Less capital expenditureUSD -545.0mUSD -586.6mUSD -627.9mUSD -668.4mUSD -707.6mUSD -745.0mUSD -779.9mUSD -811.8mUSD -840.3mUSD -864.8m+5.3%
    Capex, % of revenue3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.1%3.1%-
    Less increase in working capitalUSD -202.9mUSD -257.1mUSD -253.1mUSD -245.8mUSD -235.2mUSD -221.3mUSD -203.9mUSD -183.4mUSD -159.8mUSD -133.5m-4.5%
    Free cashflow to firmUSD 3.1bnUSD 3.3bnUSD 3.6bnUSD 3.8bnUSD 4.0bnUSD 4.2bnUSD 4.4bnUSD 4.6bnUSD 4.8bnUSD 5.0bn+5.2%
    Discount factor0.95740.87750.80420.73710.67560.61920.56750.52020.47670.4370-
    Present valueUSD 3.0bnUSD 2.9bnUSD 2.9bnUSD 2.8bnUSD 2.7bnUSD 2.6bnUSD 2.5bnUSD 2.4bnUSD 2.3bnUSD 2.2bn-
    Present Value Of The ForecastUSD 26.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.000As reported
    Cost of equity9.12%Risk-free + beta x equity risk premium
    Cost of debt6.89%Implied cost of debt of 322.0% is not a credible funding cost, so risk-free + 200bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationUSD 50.1bn99.5% of capital
    Total debtUSD 271.0m0.5% of capital, book value as a proxy
    Tax rate16.0%Effective, capped at statutory
    WACC9.11%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 191.11

    57% of EV

    Forecast FCFF, final year
    USD 5.0bn
    Capex at depreciation, working capital in reinvestment
    USD 5.5bn
    Less reinvestment at g/ROIC (7.5% of NOPAT)
    USD -412.4m
    Capitalised
    USD 5.1bn
    ROIC (reported)
    33.1%
    Terminal value, undiscounted
    USD 78.4bn
    Terminal value, discounted
    USD 34.3bn
    Enterprise value
    USD 60.6bn
    Less net debt
    USD 58.0m
    Equity value
    USD 60.5bn

    Exit at 13.7x EBITDA

    Value per shareUSD 214.20

    61% of EV

    Terminal value, undiscounted
    USD 95.2bn
    Terminal value, discounted
    USD 41.6bn
    Enterprise value
    USD 67.9bn
    Less net debt
    USD 58.0m
    Equity value
    USD 67.9bn

    Spread between methods: 11%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.11%247.52260.12275.59294.98319.92
    8.11%208.78216.54225.78236.94250.66
    9.11%180.33185.30191.12197.97206.14
    10.11%158.57161.85165.62170.00175.12
    11.11%141.41143.60146.10148.97152.28

    Outlined: this model. Green text: above today's price of 157.95. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year12.3%4.9%2.5%
    EBIT margin25.8%22.4%18.6%
    Discount rate-9.1%10.5%
    Download as Excel

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    Yahoo Finance and RBA data. General information, not advice. Methodology.