Honeywell International Inc.
HON · NASDAQ-GS
Next quarter
Expected to report Jan 28, 2027 — estimated from last year’s reporting date.
Consensus is $2.45 EPS for Dec 2026 across 3 estimates, ranging $2.43 to $2.47.
HON Sep 2026
- 4.61%
- $2.17
- $2.27
- —
- $4.99B
Reported results
- $4.99B
- 40.41%
- $1.06B
- 21.27%
- $664.00M
- $2.08
Highlights
- Adjusted earnings Adjusted EPS was $2.27, up 34% year over year and 4.6% above the $2.17 consensus; GAAP continuing-operations EPS was $2.40, down 20% against a prior-year period that included a one-time Resideo gain.
- Organic growth Sales were $4.99 billion, up 1% reported and 7% organically, with growth across all three segments; price contributed 5% and volume 2%, offset in reported sales by divestitures.
- Margin expansion Segment profit rose 23% to $1.06 billion and segment margin expanded 370 basis points to 21.3%; operating income increased 79% to $740 million and operating margin reached 14.8%, up 640 basis points.
- Raised guidance Honeywell lifted 2026 organic sales growth guidance to 4%–5%, adjusted EPS to $8.40–$8.45, and free cash flow to about $2.1 billion; it expects 5%–6% organic growth in Q4.
- Segment mix Building Automation and Process Automation and Technology each grew 8% organically; Industrial Automation grew 4% organically despite reported sales falling 23% after divestitures.
- Cash generation Free cash flow was $688 million, up 15%, with 95% adjusted free-cash-flow conversion. Operating cash flow from continuing operations was $607 million, down 74%, largely reflecting the prior-year Resideo payment.
- Backlog Backlog was $18.8 billion at quarter-end. The filing reports a 1% year-over-year increase; the release cites 7% growth excluding the WWS and PSS divestitures.
Analysis
Honeywell’s first quarter as a standalone automation company delivered broad organic growth, sharply higher margins and an earnings beat. Sales of $4.99 billion increased 1% year over year reported and 7% organically, while adjusted EPS of $2.27 rose 34% and exceeded the $2.17 consensus by 4.6%. GAAP continuing-operations EPS was $2.40, down 20%, principally because the year-ago quarter included a one-time gain from the Resideo agreement termination. Segment profit grew 23% to $1.06 billion, expanding segment margin 370 basis points to 21.3% as pricing and productivity gains offset inflation and volume leverage improved. Building Automation and Process Automation and Technology each posted 8% organic growth; Industrial Automation grew 4% organically despite divestiture-related reported declines.
The comparison with Q2’s $9.72 billion of revenue and $17.83 diluted EPS is not like-for-like: Honeywell completed the Aerospace spin-off in June, and Q2 earnings also included the large Quantinuum deconsolidation gain. Q3 reported revenue was $4.93 billion a year ago, while adjusted EPS was $1.70. Management raised full-year organic growth guidance to 4%–5%, adjusted EPS to $8.40–$8.45, and free cash flow to approximately $2.1 billion. Free cash flow reached $688 million, up 15%, although continuing-operations operating cash flow fell to $607 million from $2.31 billion, largely due to the prior-year Resideo cash settlement.
Growth and margins
The headline was that organic growth translated into substantially faster profit growth in Honeywell’s first quarter following the Aerospace separation. Sales increased 1% reported to $4.99 billion, while organic growth was 7%; the gap reflects portfolio exits, including WWS and PSS. Price added 5% and volume 2% to the year-over-year sales change, with divestitures subtracting 9% from reported sales. Segment profit reached $1.06 billion, up 23%, and segment margin expanded to 21.3% from 17.6%. Management attributed the leverage to pricing, productivity, volume and the removal of stranded costs from prior separations and divestitures. GAAP operating income was $740 million, up 79%, and operating margin rose to 14.8% from 8.4%.
Segment performance
- Building Automation Sales increased 8% organically to $2.02 billion and segment profit rose 9% to $546 million. Building products grew 11%, led by fire and security; solutions grew 4% on services strength. Margin edged up 30 basis points to 27.0%.
- Process Automation and Technology Organic sales grew 8% to $1.86 billion; reported sales rose 16%, including an 8% contribution from the Johnson Matthey Catalyst Technologies acquisition. Projects grew 14%, led by LNG and petrochemical demand, and aftermarket rose 4%, mainly on refining. Segment profit increased 6% to $412 million, but margin contracted 210 basis points to 22.2% on project mix and acquisition dilution.
- Industrial Automation Organic sales increased 4% to $1.12 billion, while reported sales fell 23% following divestitures. Solutions grew 16%, led by industrial measurement and utilities; products were flat as sensing growth was offset by utility meter deployment deferrals. Segment profit declined 5% to $205 million, while margin expanded 350 basis points to 18.4% on pricing and productivity.
Raised 2026 outlook
- Sales Full-year sales guidance is now $20.0 billion–$20.1 billion, with organic growth of 4%–5%, versus prior organic guidance of 3%–4%. Q4 organic growth is expected at 5%–6%.
- Profitability Adjusted EPS guidance increased to $8.40–$8.45, from $8.05–$8.35 previously; the new range implies 30%–31% adjusted EPS growth. Segment margin is expected to be about 20.5%, or roughly 290 basis points of expansion, at the upper end of prior guidance.
- Cash Operating cash flow guidance remains about $2.1 billion, while free cash flow guidance increased from about $2.0 billion to about $2.1 billion.
Cash and backlog
Free cash flow was $688 million, compared with $599 million a year ago, and adjusted free-cash-flow conversion was 95%. Continuing-operations operating cash flow was $607 million versus $2.31 billion, a 74% decline that the company primarily attributed to the prior-year $1.59 billion Resideo termination payment; Q3 2026 also included $158 million of separation-related cost payments in the free-cash-flow reconciliation. Capital expenditures were $77 million, down from $150 million. Quarter-end backlog was $18.8 billion: the filing shows a 1% year-over-year increase on the reported basis, while the earnings release cites 7% growth excluding the WWS and PSS divestitures.
Standalone transition
Honeywell completed the Aerospace spin-off on June 29 and now reports Building Automation, Process Automation and Technology, and Industrial Automation as its three segments. This changes the basis for sequential comparisons: Q3 revenue of $4.99 billion was well below the $9.72 billion reported in Q2, while Q2 diluted EPS of $17.83 included the $6.63 billion Quantinuum deconsolidation gain. In Q3, Honeywell retained a 48% Quantinuum stake accounted for under the equity method and recorded $147 million of equity losses. It also completed the WWS and PSS sales and recorded a $339 million pre-tax gain on sale, chiefly from PSS. These portfolio and nonrecurring items help explain why GAAP earnings differ from adjusted EPS and why prior-quarter reported results are not directly comparable.
