Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Honeywell International Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.7% to 2.1% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 75, DPO 106, DIO 95). At a 8.3% WACC with mid-year discounting, the terminal value (82% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 17.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $210.77 per share, suggesting HON is fairly valued by 6.9% at the current price of $226.47.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 7,048 | 7,460 | 7,862 | 8,388 | 8,568 | 8,783 |
| (−) Net Interest | 839 | 888 | 935 | 998 | 1,019 | 1,045 |
| (+) D&A | 970 | 1,001 | 1,070 | 1,096 | 1,113 | 1,141 |
| EBITDA | 8,856 | 9,348 | 9,867 | 10,482 | 10,701 | 10,969 |
| (−) Tax | 1,463 | 1,548 | 1,632 | 1,741 | 1,778 | — |
| (−) CapEx | 1,050 | 1,111 | 1,171 | 1,249 | 1,276 | — |
| (−) ΔWC | -73 | 432 | 422 | 552 | 189 | — |
| Free Cash Flow (FCF) | 6,418 | 6,257 | 6,643 | 6,940 | 7,458 | — |
| Peers' EBITDA Multiple | 17.6x | |||||
| Terminal Value | 193,486 | |||||
| WACC / Discount Rate | 8.28% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 6,167 | 5,553 | 5,445 | 5,253 | 5,213 | 129,973 |
| Enterprise Value | 157,604 | |||||
| Projection Period | 27,631 | 17.5% | ||||
| Terminal Value | 129,973 | 82.5% | ||||
| (−) Current Net Debt | 22,093 | |||||
| Equity Value | 135,511 | |||||
| (÷) Outstanding Shares | 643M | |||||
| Fair Price | $211 | -6.9% | ||||
| WACC \ EV/EBITDA Exit Multiple | 13.6x | 15.6x | 17.6x | 19.6x | 21.6x |
|---|---|---|---|---|---|
| 6.3% | $182 | $207 | $233 | $258 | $283 |
| 7.3% | $173 | $197 | $221 | $245 | $269 |
| 8.3% | $165 | $188 | $211 | $234 | $257 |
| 9.3% | $157 | $179 | $201 | $223 | $245 |
| 10.3% | $149 | $170 | $191 | $212 | $233 |
Current price: $226.47. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.