Honeywell Aerospace Inc. (NASDAQ:HONA) is the aerospace spinoff of former conglomerate Honeywell International. With Cramer having openly admitted that he has a bias for aerospace stocks, it wasn’t unsurprising that he was one of the spinoff’s biggest supporters before it occurred. While most of his attention was focused on the firm’s quantum computing spinoff, he nevertheless defended the conglomerate after multiple less-than-stellar earnings reports. However, as Honeywell Aerospace Inc. (NASDAQ:HONA)’s dropped on August 6th, here’s what Cramer said in the morning:
“Let me talk about Honeywell Aerospace, because we owned Honeywell and we got some of this. And we sold it. And we sold it because, not because the company missed. But I think the company missed because they were hopeful. There were multiple opportunities to let shareholders know that there were supply chain problems that would cause them to miss the quarter. They waited, and waited, and waited, and didn’t tell us until they reported. I think that was ill-advised, an ill-advised way to disseminate the information.
“The problems at Honeywell were actually systemic. They were really, really bad. There were many suppliers, even though it was just a couple of small percent. The cut was so big that the credibility of the company is in question. . .I spoke with management, it’s funny Carl, I spoke with management. . .there would have been a time. . .where people would have said, oh my god, this is terrible. It was not dishonesty, it just was new. It was a rookie mistake. . .they should have realized, look we’re just being hopeful. . .suboptimal way to report. . .”
Later, Cramer added that he would have preferred a preannouncement like IBM. The results that he was talking about were Honeywell Aerospace Inc. (NASDAQ:HONA)’s second quarter earnings report released on the 5th. It saw Honeywell Aerospace Inc. (NASDAQ:HONA) miss analyst revenue and earnings estimates. More importantly, the firm also lowered full year 2026 organic sales growth forecast to 4% to 5% from an earlier 7% to 9%.
Naturally, with the earnings being the first since the spinoff, they also point towards bullish and bearish viewpoints for Honeywell Aerospace Inc. (NASDAQ:HONA). On the bearish front, the firm’s supply chain weaknesses were thrown into the spotlight. CEO Jim Currier admitted that the supply chain had been unable to ramp according to expectations, but added that Honeywell Aerospace Inc. (NASDAQ:HONA) was making progress with initiatives to “integrate supplier capacity, factory operations and customer delivery to create predictable growing throughput.” The firm’s CFO Joshua Jepsen admitted that in order to meet the spares market’s capacity, Honeywell Aerospace Inc. (NASDAQ:HONA)’s investments would ” dampen near-term financial performance in the back half.”
Yet, while the troubles are there, Honeywell Aerospace Inc. (NASDAQ:HONA) could deliver over the long term. For instance, despite the woes, the firm reported an $18.5 billion backlog to indicate that long-term demand is nevertheless present. Additionally, firms like BMO kept an Outperform rating to hint that perhaps the long term story remains intact. Despite the woes, Honeywell Aerospace Inc. (NASDAQ:HONA)’s aftermarket business grew by 8% to $1.8 billion, and the firm could also benefit from the Air Force’s 38% budget increase. Yet, it appears that the woes are weighing more heavily on investors’ minds if the forward P/E ratio is considered. Honeywell Aerospace Inc. (NASDAQ:HONA) currently trades at a forward P/E of 20.92, which is quite low compared to GE Aerospace’s 46.95 and Howmet’s 55.25.
While Insider Monkey acknowledges the risk and potential of HONA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than HONA that has 100x upside potential, check out our report about the cheapest AI stock.
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Disclosure: None.
