Is Honeywell International (HON) Offering Value After Recent Spin Off Plans And Mixed Returns?

Simply Wall St.15:34

If you are wondering whether Honeywell International at around US$213 per share is offering solid value right now, the key is to look past the headline price and examine how it stacks up on different ...

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The stock has inched up 0.1% over the last 7 days, is down 8.7% over the last month, and shows returns of 8.9% year to date, 3.8% over 1 year, 22.3% over 3 years, and 12.5% over 5 years, which gives you a mixed picture of recent momentum and risk sentiment. Recent news flow around Honeywell International has focused on its role as a large US industrial and technology company, with investors watching how broader sector trends and corporate actions may affect its long term positioning. This context helps explain why the stock has seen periods of both strength and pullbacks as the market reassesses what it is worth. On Simply Wall St's valuation checks, Honeywell International currently scores 2 out of 6. The next sections will compare how different valuation methods judge the stock and then finish with a way to interpret these numbers that can give you a clearer overall view.  Honeywell International scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown. AdvertisementApproach 1: Honeywell International Discounted Cash Flow (DCF) Analysis A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting future cash flows and then discounting them back to today using a required rate of return. It focuses on the cash the company is expected to generate for shareholders rather than short term earnings swings. For Honeywell International, the model used here is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about US$4.15b. Analyst and extrapolated projections suggest free cash flow reaching around US$7.37b in 2030, with a series of annual forecasts between 2026 and 2035 that are discounted back to present value using the DCF framework. Putting these cash flows together, the DCF model points to an estimated intrinsic value of roughly US$234.13 per share. Compared with the recent share price of about US$213, this implies the stock is trading at an 8.9% discount. This sits within a range that is close to fair value rather than a clear bargain or clear premium. Result: ABOUT RIGHT Honeywell International is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act. HON Discounted Cash Flow as at May 2026 Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Honeywell International. Approach 2: Honeywell International Price vs Earnings (P/E) For profitable companies, the P/E ratio is a useful shortcut because it tells you how much you are paying for each dollar of current earnings. It also acts as a quick check on what the market is willing to pay for those earnings given its view of the company’s prospects and risks. In general, higher expected growth and lower perceived risk can support a higher P/E, while slower growth or higher uncertainty usually point to a lower, more conservative P/E being appropriate. The question is not whether a high or low P/E is good, but whether it is reasonable for the company’s profile. Honeywell International currently trades on a P/E of 34.05x. This is above the Industrials sector average of about 14.44x and also above the peer group average of 30.58x. Simply Wall St’s Fair Ratio for Honeywell International is 37.78x. This Fair Ratio is a proprietary estimate of what the P/E could be given factors such as earnings growth, profit margins, industry, market cap and specific risk profile. This makes it more tailored than a simple comparison with sector or peers. On this basis, Honeywell International’s current P/E of 34.05x sits below the Fair Ratio of 37.78x. Result: UNDERVALUED NasdaqGS:HON P/E Ratio as at May 2026 P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies. Upgrade Your Decision Making: Choose your Honeywell International Narrative Earlier it was mentioned that there is an even better way to understand valuation, so now is a good time to introduce Narratives. This is a simple tool on Simply Wall St’s Community page that lets you connect your view of Honeywell International’s story to a set of financial forecasts and an implied fair value. You can then compare that fair value to today’s share price to consider whether the stock looks expensive or cheap based on your assumptions. In practice, a Narrative is your own storyline for the company, expressed through inputs like future revenue growth, profit margins, discount rate and P/E. Instead of only reading analyst targets, you can see how your numbers translate into a fair value that automatically refreshes when new data, news or earnings are added to the platform. For Honeywell International, one investor in the Community might focus on automation, AI infrastructure and energy technology, assume stronger revenue growth and higher margins, and arrive at a fair value around US$296.0 per share. Another investor may focus on tariff exposure, separation costs and earnings risk, use more cautious assumptions and land closer to US$199.76. This shows how different, clearly stated Narratives can coexist around the same stock and give you a tighter link between story, forecast and price. For Honeywell International, however, we will make it really easy for you with previews of two leading Honeywell International Narratives: Here is how a bullish and a more cautious Narrative frame the same stock at around US$213.24 per share, using different assumptions about fair value, growth and risk. 🐂 Honeywell International Bull Case Fair value: about US$320.19 per share Implied discount to this fair value: around 33% below the Narrative fair value based on the recent close Revenue growth assumption: 15.24%  Sees Honeywell Automation, the post separation RemainCo, as closely tied to AI infrastructure demand across data centers, industrial facilities and energy systems, with about US$19.4b of contracted backlog already on the books. Argues that investors are still applying a conglomerate style valuation, while peers in pure automation and energy technology trade on higher multiples. This view suggests those multiples could support a higher share price. Highlights Honeywell Forge and energy technology businesses as key assets, with software, services and licensing seen as important for margins and long dated cash flows. It also flags execution, macro and tariff risks.  🐻 Honeywell International Bear Case Fair value: about US$199.76 per share Implied premium to this fair value: around 7% above the Narrative fair value based on the recent close Revenue growth assumption: 4.77%  Focuses on tariff exposure, shifting trade patterns and potential demand softness that could pressure margins and mean revenues and earnings do not fully match more optimistic expectations. Flags the planned separation into three companies and associated stand up and stranded costs of about US$1.5b to US$2b as a source of execution risk and possible near term earnings pressure. Builds a lower fair value by combining modest revenue growth, higher discount rates, a lower future P/E multiple and the risk that the current share price already reflects optimistic assumptions about spin off benefits and capital allocation.  Taken together, these two Narratives show the current debate around Honeywell International quite clearly, with one view leaning on AI infrastructure and automation exposure and another placing more weight on tariffs, separation costs and valuation risk. To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Honeywell International on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves. Do you think there's more to the story for Honeywell International? Head over to our Community to see what others are saying! NasdaqGS:HON 1-Year Stock Price Chart  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n        and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n        financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n        Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n        Simply Wall St has no position in any stocks mentioned.Valuation is complex, but we're here to simplify it.Discover if Honeywell International might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. 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