Honeywell International Inc. (HON) | Investment Case

1. Company Snapshot

1.a. Company Description

Honeywell International Inc.operates as a diversified technology and manufacturing company worldwide.Its Aerospace segment offers auxiliary power units, propulsion engines, integrated avionics, environmental control and electric power systems, engine controls, flight safety, communications, navigation hardware, data and software applications, radar and surveillance systems, aircraft lighting, advanced systems and instruments, satellite and space components, and aircraft wheels and brakes; spare parts; repair, overhaul, and maintenance services; thermal systems, as well as wireless connectivity and management services.

The company's Honeywell Building Technologies segment offers software applications for building control and optimization; sensors, switches, control systems, and instruments for energy management; access control; video surveillance; fire products; and installation, maintenance, and upgrades of systems.Its Performance Materials and Technologies segment offers automation control, instrumentation, and software and related services; catalysts and adsorbents, equipment, and consulting; and materials to manufacture end products, such as bullet-resistant armor, nylon, computer chips, and pharmaceutical packaging, as well as provides reduced and low global-warming-potential materials based on hydrofluoro-olefin technology.The company's Safety and Productivity Solutions segment provides personal protection equipment, apparel, gear, and footwear; gas detection technology; cloud-based notification and emergency messaging; mobile devices and software; supply chain and warehouse automation equipment, and software solutions; custom-engineered sensors, switches, and controls; and data and asset management productivity software solutions.

The company was founded in 1906 and is headquartered in Charlotte, North Carolina.

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1.b. Last Insights on HON

Honeywell International Inc.'s recent performance has been impacted by a decline in gross profitability, particularly in its services segment. Despite strong Q3 results, with net sales and adjusted EPS exceeding expectations, concerns arise from industrial softness and rising costs. The company's $44 billion shareholder returns through dividends and buybacks over the last decade demonstrate its commitment to shareholder value. However, high debt pressures and softness in automation pose risks. The imminent Solstice Advanced Materials spinoff may also influence investor sentiment.

1.c. Company Highlights

Last Price	191.33
Change Percentage	-0.47%
Open	192.77
Previous Close	192.23
Market Cap ( Millions)	121473
Volume	4290005
Year High	227.82
Year Low	169.05
M A 50	195.65
M A 200	202.38

FCF Yield	5.07%
Dividend Yield	2.29%
ROE	35.55%
Debt / Equity	220.69%
Net Debt / EBIDTA	233.28%
Price To Book	7.24
Price Earnings Ratio	19.83
Price To FCF	19.71
Price To sales	2.99
EV / EBITDA	14.09

2. Honeywell's Strong Q3 2025 Earnings: A Closer Look

Honeywell's third-quarter 2025 performance was robust, with organic sales growth accelerating to 6% year-over-year, driven by innovative solutions. Earnings per share was $2.86, up 32% from the prior year, and adjusted earnings per share was $2.82, up 9% year-over-year, beating analyst estimates of $2.59. Segment profit increased 5% from the prior year, with segment margin meeting the high end of guidance. The company's strong financial performance was highlighted by a 22% organic growth in orders to $11.9 billion, resulting in a record-high backlog.

Publication Date: Oct -24

                                    📋 Highlights
                                    Strong Q3 Performance::
                                                Organic sales growth accelerated to 6% YoY, orders rose 22% to $11.9 billion, and EPS hit $2.86 (+32% YoY).
Revised 2025 Guidance::
                                                Raised full-year EPS to $10.60–$10.70 (+7–8%), organic sales growth guidance increased by 150 bps to 6%, and free cash flow projected at $5.2–$5.6 billion.
Solstice Spin-Off Progress::
                                                Separation on track for October 2025, generating $1.6 billion in cash, with automation business restructured into simplified models.
Segment Outlook::
                                                Building Automation achieved 7% organic sales growth, Industrial Automation margin contraction expected, and Aerospace poised for margin tailwinds in 2026 from pricing and productivity.
2026 Margin Expansion Strategy::
                                                Pricing, productivity, and portfolio simplification to drive strong margin growth, with Building Automation and Aerospace segments targeting sequential improvements and Aerospace destocking largely resolved.

                                

Guidance Raise and Segment Outlook

The company is raising its 2025 EPS guidance for the third time this year, expecting full-year earnings per share of $10.60 to $10.70, up 7% to 8%. Organic sales growth guidance is increased by 150 basis points to approximately 6% for the year. The Aerospace Technologies segment expects full-year sales growth in the low double-digit range, while Industrial Automation expects full-year top-line growth to be down only low single digits, up from previous guidance.

Segment-Level Performance

The Building Automation segment delivered high single-digit growth for the quarter, with organic sales increasing 7% from the previous year. Honeywell expects margin contraction in Industrial Automation for the full year due to unfavorable mix, but anticipates a fifth consecutive quarter of organic growth in Building Automation. In Energy and Sustainability Solutions, the company expects a meaningful fourth-quarter contraction in segment margin, resulting in a roughly 1-point reduction for the full year.

Valuation and Growth Prospects

With a P/E Ratio of 22.52 and an EV/EBITDA of 15.68, the market is pricing in a certain level of growth for Honeywell. Analysts estimate next year's revenue growth at 0.8%. The company's strong ROIC of 9.88% and ROE of 35.55% indicate a solid return on investment. As Vimal Kapur, CEO of Honeywell, stated, "We feel good about our acquisitions, which complement our portfolio financially and technologically." The company's focus on organic growth, pricing strategy, and margin expansion is expected to drive growth in 2026.

Macro Trends and Outlook

The company is seeing growth across all regions, with a solid growth in the US and improving trends in Europe and China. Kapur noted that the company's customers are telling them that their CapEx expectations for 2026 are positive, driven by investments in LNG, gas, and localization of refining and petrochemical capacity. The guidance reflects these dynamics, and the company remains prudent given the uncertainties.

3. NewsRoom

Stocks to Watch as the AI-Driven Robotics Productivity Push Accelerates

Dec -04

Source: zacks.com

Honeywell's Losing Grip in Industrial Automation: What's Impeding Its Growth?

Dec -04

Source: zacks.com

3M Expands Margins While Honeywell Absorbs Restructuring Pressure

Dec -03

Source: 247wallst.com

Honeywell International Inc. (HON) Presents at Goldman Sachs Industrials and Materials Conference 2025 Transcript

Dec -03

Source: seekingalpha.com

Here Are Wednesday’s Top Wall Street Analyst Upgrades and Downgrades: American Eagle Outfitters, Equinix, Garmin, Honeywell, Uber, Wendy’s and More

Dec -03

Source: 247wallst.com

Fisher Asset Management LLC Sells 10,179 Shares of Honeywell International Inc. $HON

Dec -03

Source: defenseworld.net

Miss These Genesis Mission Stocks, and You’ll Regret It for a Decade

Dec -01

Source: investorplace.com

How black boxes became key to solving airplane crashes

Nov -30

Source: cnbc.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.67%)

6. Segments

Aerospace (Including Transportation Systems)

Expected Growth: 4.5%

Aerospace industry recovery, increasing demand for fuel-efficient aircraft engines, and growth in avionics and transportation systems drive Honeywell’s growth

Industrial Automation

Expected Growth: 4.5%

Honeywell's Industrial Automation segment is expected to grow driven by increasing demand for advanced automation and control solutions in process industries, as well as the need for operational efficiency, safety, and reduced costs.

Building Automation

Expected Growth: 5.5%

Honeywell's growth is driven by its diversified portfolio, investments in digital technologies, and increasing demand for energy-efficient solutions, particularly in the aerospace and industrial segments.

Energy and Sustainability Solutions

Expected Growth: 4.5%

Honeywell’s growth is driven by increasing adoption of industrial automation, demand for energy-efficient solutions, and growing need for cybersecurity in industrial settings.

Corporate and ALL Other

Expected Growth: 4.5%

Honeywell International Inc. is expected to grow due to increasing demand for its aerospace and performance materials, driven by growth in the commercial aerospace and defense markets, as well as its strategic acquisitions and investments in digital technologies.

7. Detailed Products

Aerospace Products

Honeywell's aerospace products include aircraft engines, avionics, and flight management systems for commercial, defense, and space applications.

Scanning and Mobility Products

Honeywell's scanning and mobility products include barcode scanners, mobile computers, and printers for retail, logistics, and healthcare industries.

Process Control Systems

Honeywell's process control systems include distributed control systems, programmable logic controllers, and safety systems for oil and gas, chemical, and power generation industries.

Building Management Systems

Honeywell's building management systems include HVAC, security, and energy management systems for commercial and industrial buildings.

Performance Materials

Honeywell's performance materials include fluoropolymers, resins, and waxes used in various industries such as aerospace, automotive, and construction.

Safety and Personal Protective Equipment

Honeywell's safety and personal protective equipment include hard hats, respirators, and fall protection gear for industrial and construction workers.

8. Honeywell International Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Honeywell International Inc. operates in a industry with moderate threat of substitutes. The company's products and services are moderately differentiated, and customers have some alternatives available.

Bargaining Power Of Customers

Honeywell International Inc. has a diverse customer base, and no single customer accounts for a significant portion of its revenue. This reduces the bargaining power of customers.

Bargaining Power Of Suppliers

Honeywell International Inc. has a moderate level of dependence on its suppliers. While the company has some bargaining power, suppliers also have some leverage due to the specialized nature of some of the components used in Honeywell's products.

Threat Of New Entrants

The aerospace and industrial products industries have high barriers to entry, including significant capital requirements and regulatory hurdles. This reduces the threat of new entrants for Honeywell International Inc.

Intensity Of Rivalry

The aerospace and industrial products industries are highly competitive, with several established players competing for market share. Honeywell International Inc. faces intense competition from companies such as United Technologies, 3M, and General Electric.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	56.43%
Debt Cost	4.48%
Equity Weight	43.57%
Equity Cost	9.04%
WACC	6.47%
Leverage	129.54%

11. Quality Control: Honeywell International Inc. passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Cummins

A-Score: 5.9/10

Value: 3.5

Growth: 5.7

Quality: 5.6

Yield: 4.0

Momentum: 8.0

Volatility: 8.7

1-Year Total Return ->

Paychex

A-Score: 5.8/10

Value: 1.8

Growth: 5.8

Quality: 9.0

Yield: 6.0

Momentum: 3.0

Volatility: 9.3

1-Year Total Return ->

Caterpillar

A-Score: 5.6/10

Value: 2.0

Growth: 7.0

Quality: 7.0

Yield: 3.0

Momentum: 7.5

Volatility: 7.3

1-Year Total Return ->

A-Score: 5.1/10

Value: 1.9

Growth: 2.1

Quality: 5.8

Yield: 6.0

Momentum: 7.0

Volatility: 8.0

1-Year Total Return ->

Honeywell

A-Score: 5.1/10

Value: 3.0

Growth: 4.0

Quality: 6.0

Yield: 4.0

Momentum: 4.0

Volatility: 9.3

1-Year Total Return ->

Compass Diversified

A-Score: 4.4/10

Value: 7.4

Growth: 2.3

Quality: 4.5

Yield: 10.0

Momentum: 0.0

Volatility: 2.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

2.72%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.47%

Honeywell International Inc. - US4385161066

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on HON

1.c. Company Highlights

Less Volatile

Expensive

Average Quality

Earnings Beats

Revenues Beats

Average Yield

Fairly Valued

Revenues Miss

Average Growth

2. Honeywell's Strong Q3 2025 Earnings: A Closer Look

Guidance Raise and Segment Outlook

Segment-Level Performance

Valuation and Growth Prospects

Macro Trends and Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.67%)

6. Segments

Aerospace (Including Transportation Systems)

Expected Growth: 4.5%

Industrial Automation

Expected Growth: 4.5%

Building Automation

Expected Growth: 5.5%

Energy and Sustainability Solutions

Expected Growth: 4.5%

Corporate and ALL Other

Expected Growth: 4.5%

7. Detailed Products

Aerospace Products

Scanning and Mobility Products

Process Control Systems

Building Management Systems

Performance Materials

Safety and Personal Protective Equipment

8. Honeywell International Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Honeywell International Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

191.33$

Current Price

191.33$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA