Honeywell International Inc. (NASDAQ:HON) closed at $213.80 on October 1, having completed the second of two spin-offs that split the conglomerate into three listed companies.
Solstice Advanced Materials separated in October 2025, and Honeywell Aerospace followed in June 2026, leaving Honeywell as a pure-play automation business. Together they are now worth less than the single company was a year ago.
READ ALSO: Citigroup (C) Lines Up a $3 Billion Banamex IPO for January
The Three Pieces Are Worth Less Than the One Was:
The arithmetic has not cooperated. Honeywell is worth about $64 billion, Honeywell Aerospace $51.8 billion, and Solstice Advanced Materials $9.4 billion. Those add to about $125 billion. The same shareholder base held a single company worth about $134 billion in September 2025, before either separation happened.
The comparison is worse against the high. At the end of March 2026, after Solstice had gone but before Aerospace left, the remaining Honeywell and Solstice were worth about $155 billion together.
So the value peaked between the two separations and has fallen about 19% since then. The S&P 500 rose about 14% over the past twelve months.
Aerospace is where most of the damage sits. Its shares have fallen about 23% over twelve months, and earnings dropped 70.90% in the most recent quarter.
Its first report as an independent company was the problem. Honeywell Aerospace cut full-year guidance in August, weeks after separating, which is the worst possible moment to discover a business was being flattered by the group it belonged to.
DON’T MISS: Amgen (AMGN) Sells its Deerfield Campus for $151 Million and Leases it Back
Separation Divided the Debt and Multiplied the Overheads:
What a breakup cannot do is reduce what the group owed. The three companies now carry $53.54 billion of debt between them, with Honeywell holding the bulk of it at $34.96 billion.
Aerospace shows what that allocation cost. It was separated with enough debt to leave book value per share at negative $17.97, so the business arrived in public markets already encumbered.
Each company also now runs its own board, listing, audit, and reporting functions. Those costs were shared before and are duplicated three times now.
The remaining Honeywell looks the healthiest of the three. Automation grew revenue 4.30% in the most recent quarter, its first full period after the Aerospace separation. Its headline multiple is misleading, though. The trailing figure is inflated by gains booked on the separations themselves, so the forward multiple is the only one worth using.
Solstice has been the only clear winner. Its shares are up about 16% over twelve months, and revenue grew 11.10%, the fastest of the three.
The Valuation Case:
Honeywell closed at $213.80 on October 1, up just 3.47% over twelve months while the S&P 500 rose about 14%. Automation grew revenue 4.30% last quarter.
The growth is sustainable, and that is the problem. Automation compounds at mid-single digits through most conditions, so there is no recovery to wait for.
The stock is not cheap on that. At about 22 times next year’s estimates, it trades above the S&P 500 at roughly 19 times, despite growing in mid-single digits. Mid-single-digit growth takes the multiple only to about 21 times by 2028.
This is a stock owned for steadiness, so it competes with the safe alternative rather than with growth. It yields 1.31% and keeps the rest, on a 4.5% earnings yield and mid-single-digit growth. Treasury Inflation-Protected Securities pay a fixed return on top of inflation. They yielded 2.88% above inflation on October 1, while the plain ten-year Treasury paid 5.24%. Paying 22 times earnings for 4% growth, against a guaranteed 5.24% and $34.96 billion of debt, is not enough compensation.
Conclusion:
The logic behind the split was sound, because automation, aerospace, and specialty materials compete for capital on completely different timescales and no single management team prices all three well. Solstice has justified the decision on its own. However, the market has not paid for the clarity. The three pieces are worth about $125 billion against about $134 billion for the single company a year ago. The debt was divided rather than reduced, and Aerospace cut guidance within weeks of standing on its own.
Market Sentiment:
Honeywell International Inc. was held by 74 hedge funds with a combined stake value of about $1.41 billion at the end of Q2 2026 in the Insider Monkey database. This is down from 75 hedge fund holders with a cumulative investment value of around $3.55 billion in the previous quarter.
While we acknowledge the risk and potential of HON as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HON and that has 10,000% upside potential, check out our report about this cheapest AI stock.
READ NEXT: What is Charles Schwab’s (SCHW) Economic Moat, and is it Widening or Narrowing? and Costco (COST) vs Walmart (WMT): Which is a Better Stock to Buy?
This article is originally published at Insider Monkey.
