By Al Root

Honeywell's other business laid out its case to investors on Thursday. So far, investors are impressed.

The industrial conglomerate is on the cusp of a breakup that will create two multibillion-dollar companies; one dedicated to aerospace and the other to automation. Last week, Honeywell Aerospace hosted an investor event. Today, it's Honeywell Automation's turn.

Automation hosts an investor event in New York City. Ahead of the meeting, the company laid out its financial algorithm.

Honeywell's automation businesses generate annual sales of about $17 billion, and operating profit margins of about 21%, selling hardware, software, and services into the commercial building, energy, and industrial markets. The goal is to grow top-line sales by 4% to 6% a year, and expand profit margins to about 24% over the next three years. That should generate double-digit earnings-per-share growth.

That's similar growth to the likes of Emerson Electric, Rockwell Automation, and Schneider Electric. Those three stocks trade at an average of about 25 times expected earnings over the coming 12 months. Honeywell stock trades for closer to 19 times.

Honeywell Aerospace plans 6% to 8% annual sales growth and margin expansion, which should lead to low-double-digit earnings growth.

Aerospace stocks also trade at higher price-to-earnings ratios than Honeywell. Management hopes the breakup generates value by creating the right comparisons.

Ultimately, value generation will depend on producing the expected growth and margin expansion at Honeywell Aerospace and Honeywell Automation.

For now, investors like the targets. Honeywell stock was up 2.7% in premarket trading at $211.33. To be sure, the market is helping. S&P 500 and Dow Jones Industrial Average futures were both up about 0.7%. Honeywell stock dropped 4.6% on Wednesday, while the Nasdaq Composite fell 2%.

Coming into Thursday trading, Honeywell stock was up 6% this year and down 3% over the past 12 months. Investors might have been waiting for the spin before considering shares. The breakup is expected to be done on June 29.

Write to Al Root at allen.root@dowjones.com

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June 11, 2026 07:46 ET (11:46 GMT)

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