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Honeywell is splitting into 3 parts, which is kind of reminiscent of the split that GE did a few years ago. As these big conglomerates split, they shed the “conglomerate discount” and high growth areas can be valued at comparable company multiples.
GE Vernova is up over 600% since the split, because of the strong growth of its strong power generation and gas turbine business. GE remainco, the aerospace business, is up 40% since mid 2024. The worst performer, GE healthcare, is only up 30% over the past 3 years, but it had a great 40% run right out of the gate in the first 4 months.
Honeywell has already spun off its advanced materials division Solstice, which is up 64% since the spin off on October 30, 2025. They have a big refrigerants business, which is replacing the legacy hydrofluorocarbons (which have high potential for adding to global warming). This business is benefiting from strong HVAC demand. The multiple is currently at 55X trailing earnings and 31X forward earnings.
The current Honeywell has a market cap of $148 billion and has $37 billion of trailing revenue and trades at 33x trailing earnings and 22x forward earnings.
The next spin off is the Honeywell Aerospace which will come public under the ticker HONA in Q3 2026. There is an investor day scheduled for June 3, 2026. It had $17.5 billion of revenue in 2025, with 40% from defense and space, 30% commercial original equipment (airplane parts), and 30% repairs for existing airplane fleets. Pro forma it looks like $1.5 billion of net income.
Airplane part maker comps are Howmet which trades at a hefty 69X trailing earnings and 55x forward and Carpenter which trades at 51x trailing, 40x forward.
The Honeywell “remainco” will have about $20 billion in annual revenue, across 3 divisions: building automation, industrial automation, and process automation and technology. The pro forma operating margin of the remainco is around 15%. I think the pro forma net income might be around $2 billion trailing.
Building automation includes things like HVAC control, sensors and electrical equipment, software to control these, fire and security systems, energy and sustainability (LEED compliance). Industrial automation includes industrial sensors, safety switches, a robotics division (think pallet moving robots), and heat exchangers. And process automation and technology has software to run big industrial plants like oil refineries, LNG plants, chemical plants, paper mills and the old universal oil products (UOP) which has patented processes for many key steps in refining and licenses them out.
I think the Honeywell remainco might be a standout with many cool growth drivers tied to AI buildout (HVAC controls, electrical equipment) robotics and automation (industrial automation division) and the current boom in the U.S. petrochemical industry (UOP).
This could get valued alongside comps in HVAC/electrical like Comfort Systems, which trades at 56x trailing earnings and 44x forward, or Rockwell which trades at 46X trailing and 33x forward earnings.
Both of the remaining divisions seem to have comps at higher multiples than the current Honeywell.
Thought this was kind of interesting.