Fundamentals · HON
Earnings Quality (Accruals) for HON
AI-generated plain-English read of earnings quality (accruals) for HON. Updated daily.
Earnings quality concern, stable trend — gap is widening
lowNet income (—) is running well ahead of the cash the business actually generates (—), with the gap at 5.8% of assets — a sign earnings may be flattering reality.
What will probably happen
- Earnings are likely being inflated relative to real cash generation; expect pressure on reported profits as working capital normalises.
- If the gap persists another quarter, the read escalates to 'aggressive' — a 10.0% ratio sustained for two periods is a strong reversal warning.
What to do
- If you HOLD this stock
- The gap between reported earnings and actual cash (5.8% of assets) is a meaningful risk. Decide consciously whether your position size already accounts for a potential earnings reset — if not, consider trimming until the gap narrows for at least two consecutive quarters.
- If you're EVALUATING this stock
- The gap between reported earnings and real cash generation (5.8% of assets) should factor into your valuation model — discount multiples accordingly or wait for two consecutive quarters of improvement before initiating.
- If you trade OPTIONS
- No strong options edge from earnings-quality alone. Use standard IV-rank screening rather than an accruals directional bet.
Fewer than 2 periods of history (0) — severity classification is based on the current ratio only, with no trend context.
Technical details
Technical analysis
- Severity
- Worrying
- Net income
- —
- Earnings quality
- Low
- Operating cash flow
- —
- Average total assets
- —
- Trend (last 4 periods)
- Stable
- BS-based accruals ratio dNCWC / avg assets
- -0.9%
- CF-based accruals ratio (NI - CFO) / avg assets
- 5.8%
Key levels
| Level | Value |
|---|---|
| watch threshold | 0.1 |
| bs accruals ratio | -0.009 |
| cf accruals ratio | 0.058 |
Caveats
- Only 0 period(s) of history — trend assessment unreliable.