HON: Investor Day Preview: HON Technologies RemainCo Forging Ahead

Research evidence excerpt

HON: Investor Day Preview: HON Technologies RemainCo Forging Ahead

Honeywell International Inc.

1Q26 Earnings Recap

Honeywell delivered a mixed 1Q26 operating beat (8c/+3%) and reaffirmed full-year 2026

guidance despite navigating simultaneous portfolio transformation, geopolitical disruption,

and supply chain headwinds. Aerospace came in short of expectations due to an acute supply

chain disruption that has mostly been resolved, while PA&T headwinds from the Middle East

conflict are expected to persist into 2Q26 before a sharp 2H26 rebound. 2Q26 guidance was

light, driven by a higher tax rate and Middle East disruptions. Building Automation continues

to report healthy HSD% growth. Several portfolio moves were announced this quarter,

including the PSS sale to Brady Corp ($1.4 billion), the WWS sale to AIP (no terms disclosed),

Quantinuum's IPO filing, and the explicit June 29 Aerospace spin date. For more, please see

our recap here.

Valuation

SOP valuation implies 26% upside to shares. Our sum-of-the-parts analysis implies a $275

valuation if HON shares traded in-line with the weighted average 2027E EV/EBITDA of its

publicly traded peers at 19.0x.

HON shares are trading at a 16% relative P/E discount to peers. HON shares are trading at

19.3x our 2027 EPS estimate, a 16% discount to peers. This compares to the company’s

historical relative P/E range vs. peers of (25%)-5%.

EV/EBITDA is at a 3% discount to Multi-Industry peers. On a 2027E EV/EBITDA basis, HON is

trading at 16.4x, or a 3% discount to its large-cap Multi-Industry peers.

DCF implies a $269 valuation. Our discounted cash flow analysis implies a $269 valuation,

assuming a 6.4% weighted average cost of capital with a 1.1 beta, 5.0% annual sales growth

from 2028-2030E, and a 1.5% terminal growth rate.