Honeywell International Inc. (HON): A Bull Case Theory

We came across a bullish thesis on Honeywell International Inc. on Dragon Invest Global’s Substack by Dragon Invest. In this article, we will summarize the bulls’ thesis on HON. Honeywell International Inc.’s share was trading at $236.88 as of July 16^th. HON’s trailing and forward P/E were 27.05 and 23.04 respectively according to Yahoo Finance.

Honeywell International, a century-old industrial titan, stands at a pivotal moment as it considers restructuring to unlock trapped value. Once revitalized under former CEO David Cote, the company transformed into a diversified powerhouse with leading positions in aerospace, industrial automation, building systems, and energy solutions—sectors with secular growth tailwinds.

Honeywell Aerospace, its most valuable segment, enjoys deep moats, proprietary technology, and strong aftermarket revenue. Despite this, Honeywell’s stock has underperformed both peers and broader indices, with negative reactions following its last six earnings reports. This disconnect is particularly stark given aerospace’s robust valuation expansion, underscoring market frustration with the conglomerate model.

Honeywell’s complex structure—spanning 12 public-facing segments and over 700 global sites—dilutes management focus and limits strategic agility. Internal capital allocation has also skewed inefficiently, with Aerospace earning 43% of profits but receiving only 10% of M&A capital. The company’s broad scope spreads leadership thin and impedes specialized governance, while internal competition and conflicting priorities sap innovation and margin expansion.

A breakup into four standalone entities—Aerospace, Industrial Automation, Building Automation, and Energy—would align capital, focus leadership, and unlock shareholder value. Based on segment FCF and peer multiples, the sum-of-the-parts valuation is $342/share versus $235 currently, implying ~50% upside.

Recent simplification efforts like the spin-off of the Advanced Materials unit mark early steps, but analysts argue that full separation is needed. With clearer investor preference for focused, pure-play entities over diversified conglomerates, Honeywell’s potential transformation could echo the success of peers like GE, offering a compelling case for both equity and event-driven investors.

Previously we covered a bullish thesis on GE Aerospace by Asymmetric Ventures in May 2025, which highlighted its dominant aftermarket engine services, strong OEM partnerships, and high-margin MRO contracts. The company’s stock price has appreciated approximately by 10% since our coverage. Dragon Invest shares a similar perspective but emphasizes Honeywell’s structural inefficiencies and the upside from a potential breakup.

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Disclosure: None.