Good morning investors!

Welcome to our latest “Deep Dive” — a high level, easy to follow stock analysis designed to give our Edge+ members an EDGE when it comes to properly valuing a company. We do the heavy lifting so you can make more sound investing decisions.

Today’s deep dive target is HON — a Fortune 100 industrial powerhouse with exposure across aerospace, buildings, automation, and materials.

In today’s article we will look at the company’s performance, recent results, and dive deeper into its valuation to determine whether the stock is a BUY, SELL, or HOLD, based on our opinion alone.

Alright, grab your coffee and let’s dive in.

Honeywell isn’t the kind of company that usually dominates investor conversations. It doesn’t have the flashy growth story of a Palantir or the cultural cache of a Tesla. Instead, it sits quietly in the background, embedded in aerospace systems, building automation, industrial safety, and energy transition projects that keep the modern economy humming. That lack of hype is exactly why we’ve been drawn to it.

What makes Honeywell compelling is its balance of stability and optionality. The company generates billions in free cash flow, returns significant capital to shareholders, and operates in markets where switching costs, certifications, and long product lifecycles create durable moats. Yet it’s not just a sleepy industrial: Honeywell is in the midst of a portfolio transformation, shedding slower-growth businesses and setting up three focused companies, Aerospace, Automation, and Advanced Materials, that could each attract their own investor base and trade at higher multiples.

Recently, we’ve spent time digging into the numbers, backlog trends, and competitive dynamics across Honeywell’s segments. Aerospace is benefiting from robust defense and space demand, building automation is riding the sustainability wave, and even as warehouse automation struggles, management has been decisive in reshaping the portfolio. Execution risk is real as the spin-offs must be clean, costs contained, and margins defended in the face of inflation, but if they succeed, Honeywell could unlock value that isn’t fully reflected in today’s price.

Honeywell doesn’t fit the mold of a hypergrowth stock, nor does it trade at distressed multiples. Instead, it offers investors like me a chance to own a high-quality cash generator with catalysts on the horizon and downside anchored by a diversified base of recurring revenue. The question is whether this next chapter, driven by separations, focused capital allocation, and secular demand in aerospace and sustainability, can re-rate the stock from “conglomerate discount” to “industrial compounder.”

This deep dive explores why we believe Honeywell’s setup deserves serious attention right now.

We have been diligently working behind the scenes to develop several stock analysis systems for our members, including The Edge Scoring System.

The system takes tons of data and provides a score for 5 different metrics:

The system then takes these five metrics and provides an overall rating for the stock, which we refer to as the Edge Score.

Here is our full Edge Score for Honeywell:

Below, we will further break down each category and share our methodology for scoring for this company.

Honeywell International Inc. is an American multinational conglomerate headquartered in Charlotte, North Carolina, with roots dating back to 1885 when Albert Butz invented the damper-flapper, an early breakthrough in temperature control. The modern Honeywell brand emerged in 1927 after a merger with Minneapolis Heat Regulator Company and has since expanded into aerospace, automation, building systems, and advanced materials.

Today, Honeywell operates across four primary segments: Aerospace Technologies (engines, avionics, and defense systems), Industrial Automation (process solutions, warehouse workflow, sensing, and safety), Building Automation (fire, security, and energy-efficient building management), and Energy & Sustainability Solutions (catalysts, specialty chemicals, and clean energy technologies). Its products are deeply embedded across mission-critical industries, from aircraft cockpits to factory floors and commercial buildings worldwide.

Over the past two decades, Honeywell has steadily reshaped its portfolio, divesting slower-growth businesses such as automotive turbochargers and PPE while adding higher-margin platforms in automation, catalysts, and energy transition.

In 2025, under CEO Vimal Kapur, the company announced plans to separate into three standalone entities, Aerospace, Automation, and Advanced Materials, aimed at unlocking shareholder value by giving each business sharper strategic focus.

Honeywell has also leaned into digital transformation, building out its Honeywell Forge IoT and analytics platform and investing in quantum computing through its majority stake in Quantinuum. These moves highlight management’s ambition to reposition Honeywell as more than a traditional industrial, bridging physical products with software, data, and next-generation technologies.

Honeywell generates revenue through a diversified mix of aerospace systems, industrial automation, building technologies, and energy solutions. Its portfolio combines product sales, long-cycle engineering projects, recurring aftermarket services, and licensing, creating a blend of stability and growth optionality. The company reports across four primary operating segments:

Aerospace Technologies (~35–40% of revenue)
This is Honeywell’s largest and most profitable business, serving both commercial and defense markets. It includes:

Aerospace benefits from long product lifecycles, high certification barriers, and growing demand in both commercial aviation recovery and defense spending.

Industrial Automation (~20–25% of revenue)
Focused on optimizing manufacturing, logistics, and worker safety, this segment spans:

While secular trends favor automation, Honeywell’s warehouse and workflow businesses have faced cyclical weakness, creating a near-term drag on growth.

Building Automation (~20% of revenue)
Honeywell is a global leader in building systems that enhance safety, security, and efficiency. Offerings include:

This segment is well positioned to benefit from sustainability mandates and rising demand for energy-efficient infrastructure.

Energy & Sustainability Solutions (~15–20% of revenue)
This unit provides advanced materials and technologies that enable energy transition and regulatory compliance:

With governments and corporates investing in decarbonization, this segment has structural growth drivers despite margin volatility tied to input costs.

Revenue Model Characteristics
Across its portfolio, Honeywell combines high-recurring service streams (especially in aerospace and building automation) with project-driven revenues in automation and energy. The company consistently generates strong free cash flow, supported by aftermarket contracts, licensing fees, and installed-base maintenance, while maintaining exposure to secular growth themes in sustainability, automation, and defense.

In this section we will go over the company’s recent earnings results and dive into their financial performance over the last few years.

Thank you for joining us for this Deep Dive of Honeywell.

If you enjoyed this deep dive, be sure to LEAVE A COMMENT. We look forward to hearing your thoughts on Honeywell and our analysis. And let us know what stocks you want to see in the future.

Thank you, and until next time investors!

Mark & Chris

The Stock Investor’s Edge

This deep dive is for educational and informational purposes only. The authors are NOT financial advisors, thus cannot recommend for you to personally to buy or sell any positions. Positions taken on a particular stock are opinions of the authors and only the authors. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.