Should You Pick Honeywell Stock At $210?

Honeywell (NYSE: HON) recently released its Q4 results, with revenues and earnings exceeding the street estimates. It reported sales of $10.1 billion and adjusted earnings of $2.47 per share, compared to the consensus estimates of $9.9 billion and $2.32, respectively. The company benefited from strong building automation sales. However, Honeywell’s outlook for 2025 fell short of expectations. Honeywell has announced plans to reorganize into three separate companies: Honeywell Automation, Honeywell Aerospace, and Advanced Materials. This restructuring decision follows activist investor Elliott Management’s push for change at the company.

HON stock, with 2% returns since the beginning of 2024, has underperformed the S&P 500 index, up 28%. A weakness in safety and productivity solutions segment lately has put downward pressure on the company’s stock performance. If you want upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

Honeywell’s revenue of $10.1 billion in Q4 was up 7% y-o-y, led by Aerospace Technologies, up 9%. Looking at other segments, Building Automation sales were up 20% and Energy & Sustainability Solutions revenue saw a 4% rise. However, Industrial Automation sales were down 1%, due to continued softness in the safety and sensing technologies business. Honeywell’s segment profit margin of 20.9% in Q4’24 declined by 350 bps y-o-y. This resulted in the bottom line of $2.47, down 8% y-o-y. Looking forward, Honeywell expects its full-year 2025 sales to be in the range of $39.6 billion to $40.6 billion, and its adjusted earnings to be in the range of $10.10 and $10.50, falling short of the consensus estimate of $10.91.

A bleak outlook didn’t sit well with the investors, and HON stock dropped 6% post the results announcement. Even if we look at a slightly longer time frame, the performance of HON stock with respect to the index over the recent years has been quite volatile.

In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment around rate cuts and ongoing trade wars, could HON face a similar situation as it did in 2021, 2023, and 2024 and underperform the S&P over the next 12 months — or will it see a strong jump? While we will soon update our model to reflect the latest results, HON stock seems to be undervalued. At its current levels of around $210, it’s trading at 21x trailing earnings of $9.89 per share, versus the stock’s average P/E ratio of 25x. We believe that the current valuation discount presents an attractive entry point for investors seeking robust long-term returns in HON stock.

While HON stock appears to have some room for growth, it is helpful to see how Honeywell’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 2/7/2025
[2] Cumulative total returns since the end of 2016

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