michael beardshaw jeremy schubert charles heldridge lucas mendoza

Michael BeardshawJeremy SchubertCharles Heldridge

Lucas Mendoza

United Technologies• Founded in 1929 as a response to Boeing– Headquarters – Hartford, CT

• Employs 212,000 people• Market Cap: $89.05 B• Creates – helicopters, aircraft engines– elevators and escalators, fuel cells, HVAC

• Hybrid inventory valuation– Primarily FIFO, some subsidiaries use LIFO

Honeywell• Founded in 1904 by Mark Honeywell

– Headquarters – Morristown, NJ• Employs 132,000 people worldwide• Market Cap: $75.24 B• Currently operates in

– Operates and creates aerospace and defense products – Smart technology control systems – Chemical products for the pharmaceutical industry– Efficiency production products for the automotive industry

• Hybrid inventory valuation– Some subsidiaries use LIFO

Boeing• Founded in 1916 – Headquarters – Chicago , Illinois

• Employs 169,000 people worldwide• Market Cap: $96.17 B• Currently operates in– Aerospace and defense, commercial airplanes,

helicopters, and air transportation– The defense industry is Boeing’s largest sector due to

the large line of defense products and services offered• Uses Weighted Average Inventory method

Common Size Income StatementCommon Size Income Statement

Boeing 2010

Boeing 2011

Boeing 2012

UTX 2010

UTX 2011

UTX 2012

Honeywell 2010

Honeywell 2011

Honeywell 2012

Sale Of Products 81.8% 83.5% 87.2% 71.1% 69.7% 70.6% 79.7% 78.7% 79.2%

Sale Of Services 18.2% 16.5% 12.8% 28.9% 30.3% 29.4% 21.3% 21.3% 20.9%

Total Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Cost of Products -65.6% -67.9% -73.8% -53.3% -52.5% -53.9% -62.0% -63.6% -60.9%

Cost of Services -14.8% -13.2% -10.0% -19.3% -19.9% -19.2% -14.4% -14.6% -14.2%

Capital Corporation Interest Expense -0.3% -0.2% -0.1% N/A N/A N/A N/A N/A N/A

Total Cost and Expenses -80.6% -81.3% -84.0% -72.6% -72.4% -73.0% -76.5% -78.2% -75.1%

Income from Operating Investments 0.4% 0.4% 0.3% 0.2% 1.0% 1.7% 0.3% 0.2% 0.2%

Administrative Expensive -5.7% -5.0% -4.5% -11.1% -11.1% -11.2% -14.1% -14.8% -13.9%

Research and Development -6.4% -5.7% -4.0% -3.2% -3.5% -4.1% N/A N/A N/A

Earnings from Operations 7.7% 8.5% 7.7% 13.2% 14.1% 13.3% 9.7% 7.3% 11.2%

Interest and Debt Expense -0.8% -0.7% -0.6% -1.2% -0.9% -1.3% -1.2% -1.0% -0.9%

Earnings before Income Tax 7.0% 7.9% 7.2% 12.0% 13.2% 12.0% 9.5% 6.2% 10.3%

Income Tax Expense -1.9% -2.0% -2.5% -3.4% -3.8% -3.0% -2.4% -1.1% -2.5%

Net Income 5.1% 5.9% 4.8% 8.7% 9.6% 9.5% 6.1% 5.7% 7.8%

Common Size Balance Sheet

Revenue by Segment

Major Segments:Aerospace - 5% steady annual growth expected Defense - in decline due to decreasing demand Commercial Aircraft - increased growth rate projected, perhaps over 10%Control Solutions – Security systems, climate control, other automated systemsHuman Transportation – elevators, escalators, etc.

Revenue by Segment

33%

43%

15%

10% 31%

43%

16%

11%32%

42%

16%

10%

Aerospace

Automation and Control Solu-tions

Performance Materials and Technology

Transportation Systems

Honeywell

50%

1%

50%

0%

53%

1%

47%

0%

60%

1%

40%

0%

Commerical Airplanes

Boeing Capital Corporation

Defense, Space & Security

Other Segments

Boeing

22%

34%23%

8%13%

22%

34%

23%

8%

13%21%

29%24%

14%

12%

Otis

UTC Climate, Controls & Security

Pratt & Whitney

UTC Aerospace Systems

Sikorsky

United Technologies

Liquidity

Debt

Profitability

BA 2010 BA 2011 BA 2012 UTX 2010 UTX 2011 UTX 2012 HON 2010 HON 2011 HON 20120.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

5.14% 5.85% 4.77%

8.67% 9.24% 9.01%6.06% 5.66%

7.77%

19.63% 18.91%

16.42%

27.45% 27.56% 26.95%

23.53%21.83%

24.89%Gross Profit MarginNet Profit Margin

Investor Analysis

HON BA UTX0.0%

10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%

Percentages of Earnings Retained

201020112012

HON BA UTX1.00

1.05

1.10

1.15

1.20

Degree of Financial Leverage

201020112012

HON BA UTX0.0%

10.0%20.0%30.0%40.0%50.0%60.0%70.0%

Dividend Payout

201020112012

HON BA UTX0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Dividend Yield

201020112012

HON BA UTX0.0

5.0

10.0

15.0

20.0

25.0

30.0

P/E Ratio

201020112012

Recommendation

1. Favorable key ratios: • Quick, Current ratios• Debt ratio• ROA, ROI, ROE• P/E ratio

2. Dividends• Dividend Payout, Yield

3. Diversification is a major strength• Controls, Aerospace, Transportation

Post-Period