Honeywell’s third quarter was marked by broad-based organic sales growth and robust order momentum, which management attributed to recent investments in new product development and operational execution across its core segments. CEO Vimal Kapur highlighted that organic sales growth outpaced expectations, with double-digit increases in Aerospace and ongoing strength in Building Automation, driven by “commitment to developing new solutions that solve our customers’ most challenging problems.” Notably, the quarter’s outperformance reflected steady execution on commercial wins and early returns from portfolio transformation, even as operating margins faced pressure from cost inflation and acquisition-related headwinds.
Is now the time to buy HON? Find out in our full research report (it’s free for active Edge members).
Honeywell (HON) Q3 CY2025 Highlights:
- Revenue: $10.41 billion vs analyst estimates of $10.15 billion (7% year-on-year growth, 2.6% beat)
- Adjusted EPS: $2.82 vs analyst estimates of $2.57 (9.9% beat)
- Adjusted EBITDA: $3.00 billion vs analyst estimates of $2.65 billion (28.9% margin, 13.4% beat)
- The company reconfirmed its revenue guidance for the full year of $40.8 billion at the midpoint
- Management raised its full-year Adjusted EPS guidance to $10.65 at the midpoint, a 1.9% increase
- Operating Margin: 24.8%, up from 21.8% in the same quarter last year
- Organic Revenue rose 6% year on year vs analyst estimates of 3.2% growth (285.5 basis point beat)
- Market Capitalization: $135.2 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Honeywell’s Q3 Earnings Call
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Nigel Coe (Wolfe Research) probed margin declines in Energy and Sustainability Solutions; CFO Mike Stepniak clarified that softness was driven by catalyst delivery timing, with normalization expected in 2026.
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Julian Mitchell (Barclays) asked about Industrial Automation’s volatile growth and margin trends; Stepniak stated sequential margin improvement is expected, and backlog gives confidence for 2026 expansion.
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C. Stephen Tusa (JPMorgan) questioned the sustainability of Building Automation margins; Stepniak responded that recent mix shifts were temporary, and ongoing productivity actions should support margin gains next year.
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Scott Davis (Melius Research) inquired about the impact and performance of recent acquisitions; CEO Vimal Kapur emphasized that acquired businesses are performing ahead of deal models and are now contributing to organic growth and margin expansion.
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Amit Mehrotra (UBS) asked about Honeywell’s pricing strategy and margin opportunities post-spin; Kapur indicated that pricing will be a bigger lever for margin expansion in 2026, with lag effects resolving as inflation stabilizes.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the execution of Honeywell’s segment realignment and Aerospace separation, (2) the pace of margin recovery in Aerospace, Industrial Automation, and Energy and Sustainability Solutions as pricing actions take effect, and (3) the conversion of record backlog into revenue, particularly in long-cycle businesses. Progress on monetizing Quantinuum and further portfolio optimization will also serve as important signposts.
Honeywell currently trades at $214.34, up from $206.49 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).
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