Honeywell (NYSE: HON) recently announced its Q1 results, revealing that both revenues and earnings surpassed Wall Street expectations. It reported sales of $9.8 billion and adjusted earnings of $2.51 per share, in contrast to the consensus estimates of $9.6 billion and $2.21, respectively. The company experienced a boost from robust sales in building automation. Additionally, Honeywell has updated its outlook for 2025.
HON stock has declined by -11% since the start of the year (as of April 28), underperforming the S&P 500 index, which is down by 6%. A decline in the safety and productivity solutions segment in recent quarters, along with ongoing tariff concerns, has exerted downward pressure on the stock’s performance. However, if you seek a smoother investment experience than with a single stock, consider the High Quality portfolio, which has outperformed the S&P and achieved >91% returns since its inception.
Honeywell’s revenue of $9.8 billion in Q1 experienced an 8% year-over-year increase, primarily driven by Aerospace Technologies, which rose by 14%. In other segments, Building Automation sales increased by 19%, and Energy & Sustainability Solutions revenue grew by 2%. Nevertheless, Industrial Automation sales fell by 4%, attributed to ongoing softness in the safety and sensing technologies business. Honeywell’s segment profit margin of 23% in Q1’25 remained stable year-over-year. This led to a bottom line of $2.51, up 7% year-over-year. Looking ahead, Honeywell forecasts its full-year 2025 sales to range between $39.6 billion and $40.5 billion, and its adjusted earnings to be between $10.20 and $10.50, now projecting a 3% to 6% year-over-year earnings growth compared to the previously expected 2% to 6% growth.
A Q1 beat and a revised guidance positively impacted investors, causing HON stock to rise 5% in pre-market trading following the results announcement. However, upon examining a longer timeframe, the performance of HON stock relative to the index in recent years has been quite volatile.
In contrast, the Trefis High Quality (HQ) Portfolio, consisting of 30 stocks, demonstrates less volatility. It has significantly outperformed the S&P 500 over the past four years. What is the reason? In aggregate, HQ Portfolio stocks have delivered higher returns with reduced risk compared to the benchmark index; less of a roller-coaster experience, as shown in the HQ Portfolio performance metrics.
Considering the current uncertain macroeconomic landscape concerning tariffs, could HON encounter a scenario similar to what it experienced in 2021, 2023, and 2024 and underperform the S&P over the next 12 months — or will it experience a significant rebound? While we will soon update our model to reflect the latest results, HON stock seems to have more room for growth. At its current levels of approximately $210 (pre-market), it is trading at 20 times the expected forward earnings of $10.30 per share, compared to the stock’s last five-year average P/E ratio of 23 times. We believe that the current valuation discount offers an appealing entry point for investors searching for solid long-term returns in HON stock.
Although HON stock looks to have further growth potential, it is beneficial to assess how Honeywell’s Peers perform on key metrics. You can find other useful comparisons for companies across various industries at Peer Comparisons.
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