Honeywell Q2 Earnings Fall Short Amid Automation Segment Slump

Honeywell International's Q2 earnings beat forecasts with adjusted earnings of $2.75 per share, up 10% YoY, and revenue of $10.4 billion, an 8% increase. However, shares fell over 3% due to concerns over its automation division, which posted flat organic growth, and a narrower operating margin. The company raised its full-year adjusted earnings guidance and expects organic growth of 4% to 5%.

Honeywell International Inc. (HON) reported its second-quarter earnings on July 24, 2025, with adjusted earnings per share (EPS) of $2.75, surpassing the Zacks Consensus Estimate of $2.64 and representing a 10% year-over-year (YoY) increase [1]. The company's revenue for the quarter ended June 2025 was $10.4 billion, up 8% YoY, meeting the Zacks Consensus Estimate [1]. However, Honeywell's shares fell over 3% post-announcement, driven by concerns over its Automation and Aerospace division's flat organic growth and a narrower operating margin.

The company's operating income increased by 7% and segment profit by 8% to $2.4 billion, led by growth in Building Automation. Operating margin contracted by 30 basis points to 20.4%, and segment margin by 10 basis points to 22.9%, meeting previous guidance [2]. Honeywell's CEO, Vimal Kapur, attributed the strong results to the company's Accelerator operating system and increased focus on new product innovation.

Honeywell raised its full-year adjusted earnings guidance, expecting EPS to range from $10.45 to $10.65, up 20 cents at the midpoint from the prior guidance range. The company expects organic sales growth of 4% to 5% and segment margin expansion of 40 to 60 basis points year over year [2]. Operating cash flow is expected to be in the range of $6.7 billion to $7.1 billion, with free cash flow ranging from $5.4 billion to $5.8 billion [2].

Despite the strong quarterly results, investors remained cautious due to the Automation and Aerospace division's flat organic growth and the company's ongoing portfolio transformation. Honeywell announced a review of strategic alternatives for its Productivity Solutions and Services and Warehouse and Workflow Solutions businesses, with a planned separation of these businesses expected to be completed in the second half of 2026 [2].

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[1] Honeywell International Inc. (HON) came out with quarterly earnings of $2.75 per share, beating the Zacks Consensus Estimate of $2.64 per share. This compares to earnings of $2.49 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +4.17%. A quarter ago, it was expected that this company would post earnings of $2.21 per share when it actually produced earnings of $2.51, delivering a surprise of +13.57%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Honeywell International, which belongs to the Zacks Diversified Operations industry, posted revenues of $10.35 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.33%. This compares to year-ago revenues of $9.58 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Honeywell International shares have added about 5.9% since the beginning of the year versus the S&P 500's gain of 8.1%. What's Next for Honeywell International? While Honeywell International has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Honeywell International was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.50 on $9.93 billion in revenues for the coming quarter and $10.40 on $40.21 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Diversified Operations is currently in the top 35% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Carlisle (CSL), is yet to report results for the quarter ended June 2025. The results are expected to be released on July 30. This diversified manufacturer is expected to post quarterly earnings of $6.67 per share in its upcoming report, which represents a year-over-year change of +6.9%. The consensus EPS estimate for the quarter has been revised 1.1% higher over the last 30 days to the current level. Carlisle's revenues are expected to be $1.5 billion, up 3.2% from the year-ago quarter. Should You Invest in Honeywell International Inc. (HON)? Before you invest in Honeywell International Inc. (HON), want to know the best stocks to buy for the next 30 days? Check out Zacks Investment Research for our free report on the 7 best stocks to buy. Zacks Investment Research has been committed to providing investors with tools and independent research since 1978. For more than a quarter century, the Zacks Rank stock-rating system has more than doubled the S&P 500 with an average gain of +24.08% per year. (These returns cover a period from January 1, 1988 through May 6, 2024.) Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Honeywell International Inc. (HON) : Free Stock Analysis Report Carlisle Companies Incorporated (CSL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com).

[2] CHARLOTTE, N.C., July 24, 2025 -- Honeywell (NASDAQ: HON) today announced results for the second quarter that met or exceeded the company's guidance. The company also raised its full-year organic growth and adjusted earnings per share guidance ranges and reiterated its free cash flow guidance range. The company reported second-quarter year-over-year sales growth of 8% and organic1 sales growth of 5%, led by double-digit organic sales growth in defense and space and UOP. Operating income increased 7% and segment profit1 increased 8% to $2.4 billion led by growth in Building Automation. Operating margin contracted 30 basis points to 20.4% and segment margin contracted 10 basis points to 22.9%, meeting previous guidance. Earnings per share for the second quarter was $2.45, up 4% year over year, and adjusted earnings per share1 was $2.75, up 10% year over year. Operating cash flow was $1.3 billion, down 4% year over year, and free cash flow1 was $1.0 billion, down 9% year over year. "Honeywell delivered outstanding results in the second quarter with both organic growth and adjusted earnings per share exceeding guidance despite the unpredictable macroeconomic backdrop," said Vimal Kapur, chairman and chief executive officer of Honeywell. "With Building Automation leading the way, three out of four segments grew sales at better than 5% in the quarter, demonstrating the power of our Accelerator operating system to adapt quickly and drive growth even as business conditions change. During the quarter, we also saw promising results from our increased focus on new product innovation, which further supported the growth of our record backlog. In parallel, we continued to take a balanced approach to capital deployment, including selectively pursuing attractive M&A opportunities, such as the bolt-on acquisition of Johnson Matthey's Catalyst Technologies business and the strategic tuck-in of Li-ion Tamer." Kapur added, "With the announcement of our review of strategic alternatives for our Productivity Solutions and Services and Warehouse and Workflow Solutions businesses, this month also marked the conclusion of the in-depth portfolio review that I initiated early in my tenure as CEO to simplify and optimize Honeywell's businesses. As we prepare to separate into three industry-leading public companies, we are confident that our efforts to shape our portfolio