Honeywell Technologies (האניוול)
Analytical review · Quarter ended June 30, 2026 (Q2 2026) · After the Aerospace spin-off
Bakshi Finance — Family Office | Research Depth: Comprehensive
What this review is based on, and what to know before reading. The quarterly report on Form 10-Q for the quarter ended June 30, 2026, filed July 23, 2026; the quarter's earnings release; the 8-K of June 29, 2026 on completion of the spin-off, which includes pro forma statements and recast segment data for 2024–2026; the Q1 2026 quarterly report; and the annual report on Form 10-K for 2025. Market data: closing price on October 9, 2026, and the Bank of Israel representative dollar rate for the same day.
The Aerospace business was separated into an independent public company on June 29, 2026, two days after the quarter's actual closing date. The quarterly report itself therefore still includes it. All figures in this review for the "remaining company" come from the separate tables the company published, which it describes as a best estimate that is unaudited. A 1-for-2 reverse stock split was also completed, and all per-share figures are shown after the split.
Company Profile
Honeywell Technologies is what remains of the American conglomerate Honeywell after three steps within one year. In Q4 2025 the Advanced Materials business was spun off as Solstice. In June 2026 Quantinuum, the quantum computing company, went public, and Honeywell kept 48% of it. On June 29, 2026 the Aerospace business was spun off as Honeywell Aerospace, which trades on Nasdaq under the symbol HONA. Shareholders received one Honeywell Aerospace share for every two Honeywell shares held.
The remaining company works in automation, in three segments. Building Automation: fire detection, building controls, access control, energy management, and installation and maintenance services. Process Automation and Technology: plant control systems, licensing of refining and petrochemical technologies, catalysts, pumps and compressors. Industrial Automation: sensors, measurement instruments, gas detection and safety solutions. In 2025 sales of the three segments totaled $19.9 billion. According to the company it employs more than 50,000 people. Headquarters are in Charlotte, North Carolina. The company has no controlling shareholder and one class of shares.
The change in structure is not finished. Two businesses within Industrial Automation, productivity solutions and warehouse automation, are classified as held for sale. According to management, their sale was set to close by early August 2026. On July 17, 2026 the company acquired Johnson Matthey's catalyst technologies business for $1.75 billion.
Financial Performance
The quarter: sales and organic growth
In April–June 2026, sales of the remaining company were $5.19 billion, up 3%. Organic growth, that is excluding acquisitions, divestitures and currency, was 4%. Segment profit, the measure the company uses for its segments, rose 9% to $985 million. Segment margin rose from 18.0% to 19.0%. Operating income under accounting rules, however, fell 1% to $662 million, and its margin fell from 13.3% to 12.8%.
What needs to be neutralized: reported earnings per share for the quarter were $16.65. Of that, $15.87 is a one-time accounting gain from removing Quantinuum from the consolidated statements after its IPO. Adjusted earnings per share, as defined by the company, were $1.95, up 10%. Financial data websites currently show a price-to-earnings ratio of about 8 for the company, based on twelve-month earnings that include both this one-time gain and the earnings of Aerospace, which is no longer part of the company. That ratio does not describe the current business.
| Remaining company, $ millions | Q2-25 | Q3-25 | Q4-25 | Q1-26 | Q2-26 |
|---|---|---|---|---|---|
| Segment sales | 5,016 | 4,926 | 5,236 | 4,818 | 5,182 |
| Organic growth | +5% | +1% | +2% | +1% | +4% |
| Segment profit | 904 | 866 | 944 | 944 | 985 |
| Segment margin | 18.0% | 17.6% | 18.0% | 19.6% | 19.0% |
Figures recast by the company, excluding Aerospace and Quantinuum. The company notes that they are unaudited.
The multi-year context
On the recast basis, sales of the remaining company were $19.3 billion in 2024 and $19.9 billion in 2025. Organic growth was negative in 2024 (minus 3%) and 2% in 2025. Segment margin rose from 17.3% to 17.6%. The gap between adjusted and accounting measures is large: in 2025 operating margin was only 5.9%, mainly because of a $724 million goodwill impairment in Industrial Automation, impairments on businesses held for sale, amortization of acquired intangibles and restructuring costs. Earnings per share under accounting rules were $3.24, and adjusted earnings per share were $6.46.
| Remaining company, per share (after reverse split) | 2025 | Management guidance for 2026 |
|---|---|---|
| Sales ($ billions) | 19.9 | 19.8–20.0 |
| Organic growth | +2% | +3% to +4% |
| Segment margin | 17.6% | 20.1%–20.5% |
| Adjusted EPS ($) | 6.46 | 8.05–8.35 |
| Free cash flow ($ billions) | — | About 2.0 |
According to management, adjusted earnings per share in 2026 will rise 25% to 29%, while sales stay close to the 2025 level. Part of the gap comes from structural factors: the exit of the held-for-sale businesses, whose margins are below average; the addition of the acquired catalyst business; royalties that the Aerospace company pays for use of the name ($146 million a year in the pro forma statements); and interest savings on debt repaid with funds transferred from the Aerospace company. The filings do not specify how much of the improvement is operational and how much is structural. Two points emerge from comparing the filings: adjusted earnings for 2025 ($6.46) do not include the interest savings and the royalties, so part of the 2026 increase comes from them; and both items are included in 2026 for only part of the year, because the debt was repaid in March and the royalty agreement took effect on the spin-off date. Under the agreement, the initial license term is six years, renewing automatically unless the Aerospace company gives advance notice of non-renewal. The royalties are recorded as other income, not in segment profit.
Balance Sheet & Capital
The latest balance sheet published for the remaining company alone is a pro forma balance sheet as of March 31, 2026. According to it, the company held $11.4 billion in cash and short-term investments, against debt of $20.9 billion: $4.6 billion of commercial paper, $3.1 billion of current maturities and $13.2 billion of long-term debt. Net debt was $9.5 billion. Equity was $17.7 billion. Goodwill and intangible assets were $23.1 billion, 44% of total assets. The June 30, 2026 balance sheet still includes the Aerospace company, so the first standalone balance sheet will appear only in the Q3 report.
How the spin-off was funded: in March 2026 the Aerospace company issued $16.0 billion of bonds. $6.0 billion of them were transferred to Honeywell and used to retire a loan, and $9.1 billion was transferred to it in cash. Honeywell used $13.0 billion to repay debt, including a $7.5 billion bond tender. On completion of the spin-off, Honeywell's guarantee of the Aerospace company's debt was released. The spin-off increased the remaining company's equity, because the Aerospace company left with net liabilities of about $3.3 billion.
Ratings and coverage: the credit rating is A at S&P and Fitch and A2 at Moody's, with a negative outlook at S&P and Moody's. In 2025, segment profit covered pro forma interest expense 4.5 times. Operating income under accounting rules covered it 1.5 times, because of the impairments.
Capital return: in Q1 2026 the company repurchased $1.0 billion of shares, and in Q2 it repurchased none. The remaining repurchase authorization was $679 million. Before the spin-off a dividend of $2.38 per quarter was paid (on a basis adjusted for the reverse split), but the share then also included Aerospace, which now pays a separate dividend. The remaining company's post-spin dividend is not included in this review, because it has not been verified in a filing with the U.S. Securities and Exchange Commission.
Quantinuum: the 48% stake is carried at $7.26 billion (June 30, 2026), and its value at the market price on that day, as stated in the report, was $9.42 billion. On October 9, 2026, based on Quantinuum's market capitalization that day, the stake was worth about $5.2 billion, about $16.5 per Honeywell share. Quantinuum's losses are recorded in Honeywell's income statement but excluded from adjusted earnings. A deferred tax of $1.57 billion was recorded on the gain from removing Quantinuum from the consolidated statements, so any monetization of the stake would involve tax.
Segments
| $ millions | 2025 sales | 2025 segment margin | Q2-26 sales | Q2-26 organic | Q2-26 segment margin | Backlog Jun 30, 2026 |
|---|---|---|---|---|---|---|
| Building Automation | 7,367 | 26.5% | 2,002 | +9% | 27.1% | 2,675 |
| Process Automation and Technology | 6,437 | 24.0% | 1,679 | −1% | 22.1% | 9,258 |
| Industrial Automation | 6,111 | 14.7% | 1,501 | +4% | 17.2% | 7,640 |
| Corporate (expense) | (884) | — | (186) | — | — | — |
Building Automation is the fastest-growing segment. Its organic growth was 8% in 2025 and 9% in Q2 2026. According to the earnings release, the fire business grew at a double-digit rate, and orders rose 13%, led by data centers and hospitality. Segment margin rose to 27.1%.
Process Automation and Technology declined 1% organically in the quarter. Projects grew 5%, mainly in liquefied natural gas, but aftermarket sales fell 6%, according to the company because of higher catalyst shipments in the prior-year quarter. Margin fell from 23.9% to 22.1%. Orders rose 24%. The segment holds the largest backlog, $9.3 billion.
Industrial Automation is the lowest-margin segment. Its sales fell 11% organically in 2024 and 1% in 2025, and a $724 million goodwill impairment was recorded in it in 2025. In Q2 2026 it grew 4% organically, led by solutions for power infrastructure and warehouses. According to the earnings release, part of this growth came from backlog conversion in the warehouse business, which is held for sale. The segment's backlog ($7.6 billion at June 30, 2026) also still includes these businesses.
Corporate: corporate expenses, which are not allocated to the segments, were $884 million in 2025, about 4.4% of sales. They include costs previously allocated to the businesses that were spun off. The filings do not specify how much of them will remain with the company over time.
Competitive Position
The advantage the company presents is a large installed base: fire detection, building control and plant control systems already installed at customers, which generate revenue from service, upgrades and replacements. According to the company, its data layer, Honeywell Forge, connects this base to software services. In Building Automation, products are sold mainly through a network of distributors and installers. In process technology, the company holds refining and petrochemical technologies that it licenses, and catalysts that are replaced over the life of a facility. The acquisition of Johnson Matthey's catalyst business expands this area.
Where the filings show pressure: in Industrial Automation, past acquisitions did not earn back their cost: a $724 million goodwill impairment in 2025, and impairments on businesses held for sale in 2024, 2025 and 2026. In process technology, aftermarket sales depend on the timing of catalyst replacements and vary between quarters. According to the risk factors in the report, the company faces new competitors and technologies that may commoditize products.
This review does not include market share data or a comparison with competitors from a primary source.
How to Think About This Company
With Honeywell Technologies, the first question is not how much the company earns, but on what basis it is measured. Almost every number published about it today mixes three companies: what remains, the Aerospace company that was spun off, and Quantinuum, which left the consolidated statements. The reported Q2 earnings per share ($16.65) and the price-to-earnings ratio of about 8 shown on data websites are products of this transition, not of the business.
The comparison base is an estimate, not an audited report. The remaining company's figures for 2024 and 2025 were recast by the company, which notes that they are unaudited and may change. The process segment was redefined in Q1 2026, Quantinuum was removed from segment profit in Q2, Aerospace will move to discontinued operations in Q3, and the warehouse and productivity businesses will leave the industrial segment. Every multi-year comparison passes through several layers of adjustment.
Organic growth vs earnings growth. Over the last ten quarters organic growth ranged from minus 8% to plus 5%, and in 2025 it was 2%. According to management, adjusted earnings per share will rise 25% to 29% in 2026. The gap between the two rates is the central point: how much of it comes from operational improvement, and how much from a change in the business mix, from name royalties paid by the Aerospace company and from interest savings. The royalties and interest savings recur, but they enter the base once: they raise the level of earnings, not its growth rate in later years. Similarly, the first half of 2026 ended with a segment margin of 19.3%, and management's annual guidance requires about 21% in the second half — a period in which, according to management, the businesses being sold have already left the statements.
Three segments, three stories. Building Automation has been growing at a high rate with rising margins for about two years, and generates about 45% of segment profit before corporate expenses. The process segment depends on investment by the energy industries and on the timing of catalyst replacements, and holds a large order backlog. The industrial segment is in the middle of selling two businesses, after two years of decline and a goodwill impairment.
The adjusted measure and the accounting measure are far apart. In 2025 the gap between segment margin (17.6%) and operating margin (5.9%) was about 12 percentage points. Part of it is genuinely one-time, such as the goodwill impairment. Another part recurs almost every year: restructuring costs, divestiture and separation costs, impairments on businesses held for sale, and amortization of acquired intangibles. The company acquires businesses regularly, so this amortization is part of its business model.
Corporate is an open variable. Corporate expenses were about 4.4% of sales in 2025, and include costs that previously served a company twice the size. The filings do not specify how much of them will disappear, at what pace, and at what one-time cost.
Quantinuum is a separate asset inside the stock. At the market price on October 9, 2026, the 48% stake was worth about $5.2 billion, about 8% of Honeywell's market capitalization. That value is below the stake's carrying amount ($7.26 billion). Moves in Quantinuum's price affect the value of the holding, but not adjusted earnings.
Cash flow has not yet been tested in a full standalone year. According to management, free cash flow in 2026 will be about $2.0 billion, before about $0.4 billion of spin-off-related payments. Against adjusted earnings of about $2.6 billion per guidance, that is a conversion of about 76%. In Q2 free cash flow rose to $456 million, from $114 million in the prior-year quarter.
The multiples, on the right basis. At $207.73, on October 9, 2026 the stock traded at about 25 times the midpoint of the 2026 adjusted earnings guidance, and about 32 times 2025 adjusted earnings. If amortization of acquired intangibles is added back as an expense, the multiple on guidance is about 29. The remaining company has no standalone trading history, so there is no historical anchor for its multiple. These figures describe the starting point; they do not set the direction.
The framework is intended to organize the questions. It does not decide and does not take part in the decision — the decision is the reader's.
This framework is intended to structure analysis, not to produce an investment conclusion.
Risks & Monitoring
Risks that emerge from the filings
- Executing the separation: the separation, tax and services agreements with the Aerospace company. Per the report, if the spin-off does not qualify as tax-free, tax liabilities may arise; the allocation of responsibility was set in the tax matters agreement.
- Remaining costs: corporate expenses of about 4.4% of sales in 2025, and separation and divestiture costs that recur each year.
- Process segment: dependence on investment in refining, petrochemicals and gas, and on the timing of catalyst replacement. Per the risk factors, volatility in oil and gas prices may reduce customer investment.
- Building Automation: dependence on building construction and upgrades, and on inventory at distributors.
- Quantinuum: the stake's market value on October 9, 2026 (about $5.2 billion) is below its carrying amount ($7.26 billion) and below the market-based value reported for June 30, 2026 ($9.42 billion). If the decline is deemed other than temporary, an impairment may be recorded. Quantinuum's losses are recorded in the income statement according to Honeywell's share.
- Trade and macro: tariffs and retaliatory measures, the Middle East conflict and its effect on energy and shipping, and inflation. More than half of sales are outside the U.S.
- Environmental liabilities: $892 million in the consolidated report at June 30, 2026, from the legacy of historical operations.
- Management: in August 2026 the president of the process technology business left, and the head of Building Automation moved to replace him. A new head of Building Automation was appointed effective October 1, 2026.
Items to monitor in the Q3 report (October 22, 2026, per a market data site)
| # | Item | Latest reading |
|---|---|---|
| 1 | Presentation of Aerospace as discontinued operations and the first standalone balance sheet | Pro forma Mar 31: net debt $9.5 billion |
| 2 | Organic growth of the remaining company | +4% in Q2; per management +4% to +6% in the second half |
| 3 | Segment margin after the exit of the warehouse and productivity businesses | 19.0%; per management 20.1%–20.5% for the year |
| 4 | Corporate expenses | $186 million in Q2 |
| 5 | Free cash flow and separation payments | $456 million in Q2 |
| 6 | Proceeds from the sale of the held-for-sale businesses | Not disclosed in the filings reviewed |
| 7 | Contribution of the acquired catalyst business | Acquired July 17, 2026 for $1.75 billion |
| 8 | Carrying amount of the Quantinuum stake | $7.26 billion at June 30, 2026 |
| 9 | Orders and backlog | +16%; $19.6 billion |
Scenario Framework
The scenarios below are descriptive, not predictive. They include no prices, no probabilities, and do not rank the outcomes. Their only purpose is to organize the conditions that would need to hold for each state to materialize, so they can be checked against upcoming reports.
Scenarios are descriptive, not predictive.
- If organic growth in the second half of 2026 falls within the range management presented, and is based on conversion of the order backlog
- If segment margins rise even without the effect of the businesses being sold
- If corporate expenses decline visibly in the filings, without new one-time costs
- If free cash flow approaches adjusted earnings
- If organic growth stays in the 2% to 4% range, as in 2025 and the first half of 2026
- If the margin improvement is explained mainly by the change in business mix
- If separation, divestiture and restructuring costs continue to appear every year
- If Building Automation keeps leading, and the other two segments remain volatile
- If orders in the process segment do not turn into sales, or catalyst sales keep declining
- If growth in Building Automation slows during the segment's management change
- If corporate expenses stay at a similar level after the spin-off
- If the Quantinuum stake is written down, or cash flow stays well below adjusted earnings
Analytical Lens
The following six questions are identical in every company review we publish. They are deliberately open and do not lead to a single conclusion. Their role is to let the reader examine the company along the same six dimensions as any other company.
Key Observations
1. On June 29, 2026 the spin-off of the Aerospace business was completed, immediately followed by a 1-for-2 reverse stock split. The Q2 quarterly report still includes Aerospace; the remaining company's figures are based on separate tables that are unaudited.
2. In Q2 2026 the remaining company reported sales of $5.19 billion (+3%, organic +4%), a segment margin of 19.0% (vs 18.0%) and a 16% increase in orders. Reported earnings per share of $16.65 include a one-time $15.87 gain from Quantinuum; adjusted earnings per share were $1.95 (+10%).
3. In 2025 the remaining company's organic growth was 2%, and its operating margin under accounting rules was 5.9%, vs a 17.6% segment margin. Per management guidance, adjusted earnings per share in 2026 will be $8.05 to $8.35, up 25% to 29%, on sales of $19.8 to $20.0 billion.
4. Per the pro forma balance sheet at March 31, 2026, the remaining company's net debt was $9.5 billion, and goodwill and intangible assets were 44% of assets. The company holds 48% of Quantinuum, worth about $5.2 billion at the market price on October 9, 2026.
Bakshi Finance operates as a Family Office for qualified clients only. Mr. Yaron Bakshi held a licensed investment adviser license from 2008 to 2023. As of the date of this document, the company does not hold an investment advice, investment marketing or portfolio management license.
This document is intended for research and professional study purposes only. Nothing herein constitutes a recommendation to buy, sell, hold or take any action in securities. Nothing herein substitutes for advice that takes into account each person's data and needs. Any decision is the investor's sole responsibility.
Past performance is not indicative of future results. Data were drawn from official sources: the quarterly report on Form 10-Q for the quarter ended June 30, 2026 (July 23, 2026), the Q2 2026 earnings release, the 8-K on completion of the spin-off (June 29, 2026) including pro forma statements and recast segment data, the Q1 2026 quarterly report, the annual report on Form 10-K for 2025 (February 17, 2026), and other 8-K filings of the company with the U.S. Securities and Exchange Commission. Market data: stockanalysis.com. Reporting updates published after this date are not included.
Review for qualified clients — Family Office
The full analytical review of Honeywell Technologies (HON) for the quarter ended June 2026 is available to Bakshi Finance premium clients.
The review includes a 10-section analysis, "How to Think About This Company" paragraphs, a structured scenario framework, and a 6-dimension Analytical Lens.
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