Honeywell's Industrial Automation Weakness Persists: What's the Road Ahead?

Honeywell International Inc. HON has been experiencing persistent weakness in its Industrial Automation segment. In the second quarter of 2025, the segment’s sales declined 5% on a year-over-year basis, while its organic sales remained flat on a year-over-year basis. This performance follows a 4% year-over-year revenue decline in the first quarter.

Ongoing softness in the warehouse and workflow solutions business, owing to the timing of large project execution, remains a major headwind for the segment. In the second quarter, the business unit witnessed a 4% year-over-year sales decline. Weakness in the Productivity solutions and service business, due to a lower demand environment in Europe, has also been affecting its Industrial Automation segment's performance. A decrease in license and settlement payments is concerning as well. The business unit’s sales declined 7% year over year in the same period. For 2025, Honeywell anticipates the Industrial Automation segment’s organic sales to fall in the low to mid-single digits. 

On the brighter side, the company’s Aerospace Technologies segment is performing well, supported by strength in the commercial aviation aftermarket and defense & space businesses. Solid demand for HON’s products and solutions, led by increasing building projects, particularly in North America, the Middle East and India, augurs well for the Building Automation segment.

Segment Snapshot of HON’s Peers

Among its major peers, 3M Company’s MMM Transportation and Electronics segment has been benefiting from strength in the transportation and aerospace end markets. Solid momentum in the electronics, aerospace and defense, personal auto and commercial graphics markets, driven by demand for new products and expanding sales coverage, is proving beneficial for 3M’s segment as well. In the second quarter of 2025, 3M’s segment’s adjusted organic revenues grew 1% year over year.

Another peer, GE Aerospace GE, is riding on the solid demand for LEAP, GEnx & GE9X engines and services within the Commercial Engines & Services business. Revenues from GE Aerospace’s Commercial Engines & Services business jumped 30% year over year in second-quarter 2025. This growth is supported by increasing air traffic, fleet renewal and expansion activities. During the second quarter, GE Aerospace inked a deal with Qatar Airways to supply more than 400 GE9X and GEnx engines. It represents the largest widebody engine deal in the company’s history.

HON's Price Performance, Valuation and Estimates

Shares of Honeywell have gained 1.8% in the past year against the industry’s decline of 3.4%.

From a valuation standpoint, HON is trading at a forward price-to-earnings ratio of 18.73X, above the industry’s average of 16.21X. Honeywell carries a Value Score of D.

The Zacks Consensus Estimate for HON’s 2025 earnings has increased 1.1% over the past 60 days.

Honeywell currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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