Honeywell's Q3 Earnings Top Estimates on Strong Aerospace Momentum

Honeywell International Inc. HON reported third-quarter 2025 adjusted earnings of $2.82 per share, which surpassed the Zacks Consensus Estimate of $2.56. The bottom line increased 9% year over year on an adjusted basis. On a reported basis, the company’s earnings were $2.86 per share, up 32% year over year.

Total revenues of $10.41 billion beat the consensus estimate of $10.16 billion. The top line increased 7% from the year-ago quarter, driven by strength in Aerospace Technologies and Building Automation segments. Organic sales increased 6% year over year.

Honeywell Q3 Performance by Business Segment

Beginning in the second quarter of 2024, the company started operating under the segments discussed below.

Aerospace Technologies’ quarterly revenues were $4.51 billion, up 15% year over year. Organic sales increased 12% year over year. Strength in both commercial aftermarket and defense and space markets, driven by increased flight activity, augmented the top line. Sales from the commercial aftermarket surged 19% driven by persistent strength across business jet and air transport markets along with supply-chain improvements. Sales from the defense and space business increased 10% on robust global demand.

Industrial Automation revenues declined 9% year over year to $2.27 billion. Organic sales grew 1% year over year. The sales decline was primarily attributable to divestiture of personal protective equipment business. Organic sales growth was driven by strength in sensing and warehouse & workflow solutions businesses, which was partially offset by weakness in productivity solutions and services business. Our estimate for segmental revenues was pegged at $2.32 billion.

Building Automation revenues totaled $1.88 billion, up 8% year over year. Organic sales increased 7% year over year. The upside was driven by ongoing strength in both the building solutions and building products businesses. While sales from the building solutions business grew 7%, the same from building products business increased 6%. Our estimate for the segment’s revenues was also $1.88 billion.

Energy and Sustainability Solutions’ revenues increased 11% to $1.74 billion. Organic sales fell 2% year over year. The results were driven by strength in advanced materials business, supported by solid demand for refrigerants. However, weakness in the UOP business due to licensing delays and reduced catalyst shipment volumes offset the gains. Our estimate for the segment’s revenues was $1.57 billion.

Honeywell International Inc. Price, Consensus and EPS Surprise

Honeywell International Inc. price-consensus-eps-surprise-chart | Honeywell International Inc. Quote

Costs & Margins of HON

The company’s total cost of sales (cost of products and services) was about $6.86 billion, up 14.7% year over year. Selling, general and administrative expenses were $1.30 billion, down 7.3%. Interest expenses and other financial charges were $354 million, reflecting an increase of 19.2% year over year.

Operating income was $1.75 billion, down 6% year over year. The operating income margin was 16.9% compared with 19.1% in the year-ago period.

HON’s Balance Sheet & Cash Flow

Exiting third-quarter 2025, Honeywell had cash and cash equivalents of $12.9 billion compared with $10.6 billion at the end of December 2024. Long-term debt was $30.1 billion, higher than $25.5 billion at 2024-end.

In the third quarter, it generated net cash of $3.3 billion from operating activities compared with $2 billion in the prior-year quarter. Capital expenditure totaled $374 million compared with $279 million in the previous year quarter.

Free cash flow in the quarter was $1.45 billion, down 16% from the year-ago quarter’s level.

Honeywell’s 2025 Guidance

For 2025, Honeywell expects sales to be in the range of $40.7-$40.9 billion, lower than $40.8-$41.3 billion projected previously. Organic sales are now expected to increase approximately 6% compared with its earlier projection of 4-5%.

HON expects a segment margin of 22.9-23.0% compared with 23.0-23.2% guided previously. The metric indicates an increase of 30-40 basis points year over year. Adjusted earnings per share (EPS) are expected to be between $10.60 and $10.70, higher than $10.45-$10.65 guided earlier. The metric indicates an increase of 7-8% on a year-over-year basis. 

It currently expects operating cash flow in the range of $6.4-$6.8 billion. Free cash flow is expected to be in the band of $5.2-$5.6 billion.

HON’s Zacks Rank & Key Picks

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

Some better-ranked stocks from the same space are discussed below:

RTX Corporation RTX presently carries a Zacks Rank #2 (Buy). RTX’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 12.2%. In the past 60 days, the Zacks Consensus Estimate for RTX Corp.’ 2025 earnings has increased 1.3%.

Textron Inc. TXT currently carries a Zacks Rank of 2. TXT’s earnings surpassed the consensus estimate thrice and missed once in the trailing four quarters.  The average earnings surprise was 4.8%. In the past 60 days, the Zacks Consensus Estimate for Textron’s 2025 earnings has increased 0.3%.

ITT Inc. ITT currently carries a Zacks Rank of 2. ITT has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, the average surprise being 1.5%.  In the past 60 days, the Zacks Consensus Estimate for ITT’s 2025 earnings has inched up 0.2%.

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