Honeywell International Inc.
Analysis
Honeywell finished its three-way split and now runs as a pure-play automation company. Orders are accelerating and margins are expanding, but nearly all of the second-half growth is back-loaded onto long projects that convert slowly.How much of the LNG order backlog converts before 2028?
- The three-way breakup is finished.
Solstice spun off in October, Aerospace followed on June 29, and the warehouse and productivity units were sold. Those exits remove roughly $400 million of 2026 sales, yet management raised guidance across every metric on the same call.What margin do the sold warehouse and productivity units earn?
- Growth now comes from the equipment already in the field.
Software and services on top of Forge are compounding around 15% a year, and price added close to 4% last quarter while covering cost increases. Because it comes from machines already installed, it repeats without new construction.How fast can Forge recurring revenue compound from here?
- The second-half recovery depends on slow projects converting.
Process Automation orders rose 24% and the LNG heat-exchanger line is sold out three years ahead, yet management put most of 2026's growth in the second half because those orders take years to reach sales. Timing, not demand, is the risk.
- Process Automation turns its record backlog into second-half sales. That segment carries most of the promised acceleration, so the whole raised outlook rests on those projects shipping.
- Price keeps rising faster than Honeywell's own costs. Pricing is what stops rising material and labour costs from eating the gain, so it decides whether margins expand.
- Stranded costs and the divestitures deliver the planned margin lift. Most of the margin gain is meant to come from removing costs, so profit can rise even on flat sales.
- The big energy projects slip into 2027. The growth promised for the second half arrives later instead, so the raised forecast gets missed.
- Inflation keeps outrunning what Honeywell can charge. The company then sells more but keeps less of each sale, so the margin target slips even as revenue grows.
- High-margin catalyst and service work stays weak. That work earns more profit per dollar of sales than anything else Honeywell sells, so margins fall faster than revenue.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Sale | ≥$1K | Jul 8 | Sep 22 |
Donald Trump Republican · Executive | Purchase | ≥$100K | Jun 12 | Aug 22 |
Donald Trump Republican · Executive | Sale | ≥$1K | May 18 | Jul 1 |
Donald Trump Republican · Executive | Sale | ≥$15K | May 18 | Jul 1 |
Donald Trump Republican · Executive | Purchase | ≥$100K | May 15 | Jul 1 |
Congressional trading data provided by QuiverQuant
How Honeywell International turned $37.4B of revenue into $8.1B of operating income.
| Revenue | ||
|---|---|---|
| Aerospace | $17.5B | ▲ 13.27% YoY |
| Safety And Productivity Solutions | $9.4B | ▼ 6.47% YoY |
| Home And Building Technologies | $7.4B | ▼ 10.78% YoY |
| Energy and Sustainability Solutions | $3.1B | ▼ 51.22% YoY |
| Total revenue | $37.4B | |
| Gross profit | $13.8B | 36.9% |
| Operating income | $8.1B | 21.7% |