Company Reports

Honeywell Technologies reported second-quarter organic sales growth of 4% year over year. Spinoff- and mergers and acquisitions-related charges masked underlying earnings growth, but shares traded up over 5% on July 23.

In our view, Honeywell Technologies is one of the premier automation equipment manufacturers today. Its underlying strategy is similar in each end market: to embed its own equipment in the operations of customers, from which recurring revenue can be generated through aftermarket servicing. We predicate our long-term thesis on secular demand for warehouse automation, data analytics in power plants, remote security management, and energy savings in buildings. Many of Honeywell Technologies’ automation solutions offer customers meaningful returns on investment via greater uptime and throughput.

We're continuing research coverage of Honeywell Technologies, an automation equipment manufacturer, after the June 29 spinoff of its aerospace business.

In our view, Honeywell Technologies is one of the premier automation equipment manufacturers today. Its underlying strategy is similar in each end market: to embed its own equipment in the operations of customers, from which recurring revenue can be generated through aftermarket servicing. We predicate our long-term thesis on secular demand for warehouse automation, data analytics in power plants, remote security management, and energy savings in buildings. Many of Honeywell Technologies’ automation solutions offer customers meaningful returns on investment via greater uptime and throughput.

Honeywell reported first-quarter organic sales growth of 2% year over year. Management maintained full-year 2026 guidance and announced its aerospace spinoff is occurring on June 29.

Honeywell reported fourth-quarter sales growth of 6% year over year. Sales for the full year grew 8%, driven by strength in Honeywell's building automation portfolio more than offsetting weak demand for its petrochemical catalysts.

In our view, Honeywell is one of the stronger multi-industry firms in operation today. Its underlying strategy is similar in each end market: to embed its own products into the operations of customers from which recurring revenue can be generated through aftermarket servicing. We predicate our long-term thesis on secular demand for warehouse automation, data analytics in power plants, remote security management, energy savings in buildings, and broader commercial aerospace growth. Over the next five years, we think Honeywell is capable of mid-single-digit organic top-line growth, incremental segment operating margins in the high 20s to low 30s, near-double-digit earnings per share growth, and free cash flow margins in the mid-teens.

Honeywell increased third-quarter organic sales 6% year over year. Results were driven by strength in the aerospace and building automation segments. The company also announced a resegmentation to organize its automation businesses.

Honeywell reported 5% organic revenue growth and a slight contraction in operating margin year over year, resulting in 4% per-share earnings growth. Management raised guidance for sales and EPS but reaffirmed its prior free cash flow range.

In our view, Honeywell is one of the stronger multi-industry firms in operation today. Its underlying strategy is similar in each end market: to embed its own products into the operations of customers from which recurring revenue can be generated through aftermarket servicing. We predicate our long-term thesis on secular demand for warehouse automation, data analytics in power plants, remote security management, energy savings in buildings, and broader commercial aerospace growth. Over the next five years, we think Honeywell is capable of mid-single-digit organic top-line growth, incremental segment operating margins in the high 20s to low 30s, near-double-digit earnings per share growth, and free cash flow margins in the mid-teens.

Honeywell reported 4% organic revenue growth and flat earnings per share growth on slight operating margin contraction. Management raised the lower end of its full-year guidance for adjusted EPS, sending shares up almost 5% midmorning on April 29.

In our view, Honeywell is one of the stronger multi-industry firms in operation today. Its underlying strategy is similar in each end market: to embed its own products into the operations of customers from which recurring revenue can be generated through aftermarket servicing. We predicate our long-term thesis on secular demand for warehouse automation, data analytics in power plants, remote security management, energy savings in buildings, and the broader commercial aerospace recovery. Over the next five years, we think Honeywell is capable of mid-single-digit organic top-line growth, incremental segment operating margins in the high 20s to low 30s, near-double-digit earnings per share growth, and free cash flow margins in the mid-teens.

Honeywell reported fourth-quarter and full-year 2024 earnings the morning of Feb. 6, along with confirmation that management plans on separating Honeywell into three standalone businesses in 2026: aerospace, automation, and advanced materials. On a consolidated basis, revenue grew 5% and slightly depressed operating margins drove 3% earnings per share growth. We’re raising our fair value estimate to $200 from $197 to reflect the time value of money.

In our view, Honeywell is one of the stronger multi-industry firms in operation today. Its underlying strategy is similar in each end market: to embed its own products into the operations of customers from which recurring revenue can be generated through aftermarket servicing. We predicate our long-term thesis on secular demand for warehouse automation, data analytics in power plants, remote security management, energy savings in buildings, and the broader commercial aerospace recovery. Over the next five years, we think Honeywell is capable of mid-single-digit organic top-line growth, incremental segment operating margins in the high 20s to low 30s, near-double-digit earnings per share growth, and free cash flow margins in the mid-teens.

Elliott Investment Management released a letter the morning of Nov. 12, 2024, noting its $5 billion stake in wide-moat Honeywell and making the case to break the business into two entities: Honeywell Aerospace and Honeywell Automation. Our fair value estimate remains unchanged at $197 per share.

Honeywell delivered mixed results for the third quarter of 2024, with organic sales up 3% and management lowering full-year guidance. We've lowered our fair value estimate approximately 13% to $197 per share from $226 to reflect more bearish long-term growth expectations and short-term weakness in the industrial automation business. After a fresh review of the decisions that management has made, we disagree with many, and we've downgraded the firm's Capital Allocation Rating from Exemplary to Standard.

In our view, Honeywell is one of the stronger multi-industry firms in operation today. Its underlying strategy is similar in each end market: to embed its own products into the operations of customers from which recurring revenue can be generated through aftermarket servicing. We predicate our long-term thesis on secular demand for warehouse automation, data analytics in power plants, remote security management, energy savings in buildings, and the broader commercial aerospace recovery. Over the next five years, we think Honeywell is capable of mid-single-digit organic top-line growth, incremental segment operating margins in the high 20s to low 30s, near-double-digit earnings per share growth, and free cash flow margins in the mid-teens.

On Oct. 8, Honeywell announced plans to spin off its advanced materials, or AM, business. Our unchanged $226 fair value estimate reflects the combined enterprise value of Honeywell and NewCo. While we do not have definitive information regarding the spinoff, our initial rough stand-alone enterprise value for NewCo. is around $11 billion. No unrelated liabilities are being tacked onto NewCo., to our knowledge.

Wide-moat Honeywell's second-quarter sales of $9.6 billion came in at the high end of management's guidance, while adjusted EPS of $2.49 was above guidance. However, management lowered its full-year outlook due to industrial sector weakness, sending shares down more than 4% in intraday trading on July 25. We've lowered our fair value estimate to $226 per share from $238 to reflect muted near-term expectations as Honeywell integrates three acquisitions representing over $8.6 billion in aggregate spending.

In our view, Honeywell is one of the stronger multi-industry firms in operation today. Its underlying strategy is similar in each end market: to embed its own products into the operations of customers from which recurring revenue can be generated through aftermarket servicing. We predicate our long-term thesis on secular demand for warehouse automation, remote security management, energy savings in buildings, and the global commercial aerospace recovery. Over the next five years, we think Honeywell is capable of mid-single-digit organic top-line growth, incremental segment operating margins in the high 20s to low 30s, 9%-10% adjusted earnings per share growth, and free cash flow margins in the mid teens.