Honeywell International Inc. (NASDAQ:HON) saw its stock price climb on Thursday following a robust earnings report that highlighted a 16% increase in automation orders. The company, which recently completed the spin-off of its aerospace division, reported standalone adjusted earnings that surpassed Wall Street expectations, though legacy consolidated earnings fell short.
Shares of Honeywell ended Wednesday at $232.99 and gained 1.6% in premarket trading on Thursday. The advance came even as broader U.S. equity futures slipped, with the S&P 500 and Nasdaq 100 each declining roughly 0.3%.
The primary catalyst for the stock was the performance of the standalone automation business, which reported adjusted earnings of $1.95 per share, beating the consensus estimate of $1.82. Revenue for the segment reached $5.19 billion, exceeding the forecast of $5.02 billion. In contrast, the legacy consolidated group, which includes the now-separated aerospace operations, posted adjusted earnings of $4.52 per share, below the $4.81 expected by analysts.
On a GAAP basis, Honeywell reported earnings of $17.83 per share, reflecting a $6.63 billion gain from the deconsolidation of Quantinuum. The company also raised its 2026 adjusted earnings per share midpoint by 1.2% to $8.20, while trimming its revenue midpoint by 0.7% to $19.90 billion. The segment-margin midpoint improved by 25 basis points.
The company's backlog stood at approximately $20 billion, nearly equivalent to the midpoint of its full-year sales guidance. This backlog was bolstered by a 16% surge in orders, which outpaced organic sales growth of 4%, creating a 12-point gap that underscores the potential for future revenue conversion. However, the pace of conversion varies across different business lines.
Building automation was a standout, with organic sales rising 9% and margins improving by 90 basis points to 27.1%. Orders in this segment grew 13%, driven by strong demand from data centers and the hospitality sector. Process automation presented a more complex picture, as orders jumped 24% while organic sales declined 1%. Margins in that segment fell by 180 basis points to 22.1%, highlighting execution challenges in converting the order book into revenue.
Industrial automation posted organic growth of 4%, with margins increasing 90 basis points to 17.2%. Standalone free cash flow surged fourfold to $456 million, providing additional financial flexibility. Chairman and CEO Vimal Kapur characterized the corporate split as “a new era as a leading pure-play automation company.”
The company's outlook incorporates the acquisition of Catalyst, finalized on July 17, and anticipates the completion of two divestitures by early August. These transactions make year-over-year comparisons more complex. Honeywell projects organic growth of 4% to 6% for the second half of the year, though risks remain from backlog timing, inflation, and project execution. The company also cited tariffs, supply chain disruptions, and regional conflicts as ongoing challenges.
Investors are also looking ahead to the standalone earnings report from Honeywell Aerospace (NASDAQ:HONA), which is scheduled for release after the market close on August 5. For now, HON shareholders retain ownership of the building, industrial, and process automation businesses, which form the core of the new pure-play automation company.
