Honeywell beats earnings estimates, accelerates aerospace spin-off to Q3
Record $37B backlog and strong organic growth drive industrial conglomerate's Q4 performance
Honeywell International delivered stronger-than-expected fourth-quarter results, exceeding analyst projections on both earnings and revenue while accelerating the timeline for its aerospace business spin-off to the third quarter of 2026.
The industrial conglomerate reported adjusted earnings per share of $2.59, topping the consensus estimate of $2.54 by 5 cents, according to analyst data compiled by MarketBeat. Revenue reached $10.1 billion, surpassing Wall Street expectations of $10.02 billion.
The performance was underpinned by robust organic growth across key business segments. Organic sales increased 11% year-over-year, while orders surged 23% organically, driving the company's backlog to a record $37 billion, according to the earnings report. This substantial backlog positions the company for continued revenue visibility in the coming quarters.
Honeywell's guidance for fiscal year 2026 calls for adjusted EPS between $10.35 and $10.65, representing 6% to 9% growth and encompassing analyst consensus estimates. The outlook reflects confidence in the company's ability to execute amid a complex restructuring period.
In a significant strategic update, Honeywell announced it will complete the spin-off of its Aerospace Technologies business in the third quarter of 2026, moving up the previously communicated second-half 2026 timeframe. The standalone aerospace company will trade on Nasdaq under the ticker symbol "HONA" and be headquartered in Phoenix, Arizona.
The accelerated timeline comes as Honeywell continues to build out leadership for the future aerospace entity. Jim Currier will remain as chief executive of the independent business, while Josh Jepsen, currently chief financial officer at Deere & Company, will join as CFO effective February 23, according to FlightGlobal.
Following the aerospace separation, Honeywell will operate with three streamlined reportable segments: Building Automation, Industrial Automation, and Process Automation and Technology. This reorganization aims to create more focused, agile businesses that can better pursue growth opportunities in their respective markets.
Shares of Honeywell closed at $216.64 on Wednesday, down 1.9% during regular trading, but edged higher to $217.00 in after-hours activity following the earnings release. The stock has a 52-week range of $166.26 to $225.21 and currently trades at a trailing price-to-earnings ratio of 23.36.
Analysts remain broadly positive on the stock despite the recent underperformance. The consensus rating is "Moderate Buy" with an average target price of $236.44, according to MarketBeat data. Recent price targets range from Wells Fargo's $215 to Citigroup's $262, with JP Morgan setting a $255 target earlier this month.
The company's ability to generate strong organic growth while simultaneously executing two major separations—following the October spin-off of its Solstice Advanced Materials business—demonstrates operational discipline during a period of significant portfolio transformation. The record backlog provides a cushion of revenue visibility that should support earnings through the transition period.
Looking ahead, investors will focus on the execution of the aerospace spin-off and the company's ability to achieve the projected margin expansion in 2026. The separation's success will be critical to unlocking shareholder value, with Honeywell positioning the remaining businesses for higher growth rates and improved profitability profiles in the post-spin-off landscape.