A period of transition at Honeywell International (NYSE: HON) that has included a CEO change, pressure from activists, and more recently, a series of spinoffs is nearing completion, with the company set to enter 2019 leaner and more focused.

The new Honeywell hopes to combine its industrial expertise with new technologies. CEO Darius Adamczyk, who took over for Dave Cote in April 2017, wants the company to develop emerging areas such as additive manufacturing, 3D printing, and warehouse automation to capture more business from its roster of industrial customers.

Image source: Honeywell.

Investors have bought in, with shares of Honeywell up 18.59% over the past 12 months compared to a 16.27% gain for the S&P 500. But is there still room for further price appreciation? Here's a look at where Honeywell stands to try to determine if the company is a buy.

Growth-focused reorganization

Honeywell resisted activist calls for an outright breakup but is in the process of spinning off its auto-turbocharger business Garrett Motion and its Resideo Technologies home-products business. Those spinoffs are nearing completion, with Garrett having hit the market Oct. 1 and Resideo to follow before year-end, allowing the company to shed two lower-growth units and redeploy capital in other directions.

Adjusted EBITDA margins at Garrett and Resideo, at 19% and 13%, respectively, trail Honeywell's 20.8% overall margin, meaning profitability should improve once those divisions are no longer included.

The spinoffs also will give Honeywell more flexibility to seek out deals in areas including aerospace and industrial automation, where it sees opportunities for extended growth. Honeywell generated free cash flow of $1.662 billion in the second quarter, up 42% from the year prior, giving it ample firepower to continue to do deals like its recently announced 425 million euro purchase of German warehouse-automation company Transnorm.

The two spinoffs comprise about 15% of total Honeywell 2017 EBITDA and about $7.6 billion in annual revenue. Honeywell will backfill some of what is lost, with the two new companies agreeing to pay up to $315 million annually toward asbestos and other legacy liabilities. There's also $3 billion in one-time dividends to the former parent that will be used for buybacks and to pay down debt and reduce interest expense. But investors should be aware that results could be choppy for a few quarters as the separated businesses come off the books.

A high-tech industrial

The criticism of Honeywell going into 2018 was a lack of top-line growth despite strong operating environments in key end markets, including aerospace and construction. Honeywell so far this year has eased some of those concerns, with the company recording 6% organic sales growth and modest margin expansion in the second quarter. Earnings were up 18% year over year in the quarter, and as mentioned above, free cash flow is improving.