Honeywell International, Inc.'s (HON) is getting organized.
The company's more streamlined focus as it is spinning off its lower margin-businesses could spell big profits as the company frees up investment for its e-commerce-powered Intelligrated business.
As Honeywell CEO Darius Adamczyk looks at where to point his focus in his more nimble core business, warehouse automation and e-commerce through the recently acquired Intelligrated seems an opportune time to grow along with that exploding market.
Adamczyk said Intelligrated has "been just a terrific growth business. I mean, when you think about 50-, 100-percent booking rate increases, top-line growth of 20 percent plus -- it's very, very exciting." He highlighted the company's prize customer Amazon and "other exciting customers."
"Warehouse automation is huge, driven by e-commerce, it's a trend that I believe is going to continue not just in North America, but throughout the world," he said.
Automation provider Intelligrated, which was acquired in 2016, provides clients a range of voice, mobile picking technology solutions that improve efficiency of e-commerce platforms.
Honeywell expects 40% growth in the business year over year.
Analysts are also excited about the growth potential as the company narrows its list of subsidiaries to direct investment toward.
"I think it will definitely be a big piece and it's a part I'm very excited about," Morningstar, Inc. analyst Josh Agular told RealMoney in an interview. "Perfect execution is important to e-commerce companies and I think Honeywell's scale and reputation position them to provide that with automation."
He added that automation is a "final frontier" for e-commerce, as the integration of automation into e-commerce is due to grow rapidly in coming years.
E-commerce is an industry that has managed to create a $1 trillion company in Amazon, doubling the company's valuation in just one year, generates almost $3 trillion in retail sales globally, and is due to account for nearly 20% of total retail sales globally by 2021.
"It makes the spinoffs make sense," he concluded. "When Adamczyk is looking at where he is going to put his money now, warehouse automation is going to be top of the list."
Honeywell and Amazon are holdings in Jim Cramer's Action Alerts Plus charitable trust.