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HON Q2 Earnings Beat on Automation Growth, Outlook Raised
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Key Takeaways
HON beat Q2 estimates as automation strength drove revenue, earnings and orders growth.
HON raised 2026 organic sales, segment margin and adjusted EPS outlook despite a lower sales forecast.
Honeywell Technologies expects stronger Q3 and Q4 earnings, margins and organic sales growth.
Honeywell Technologies (HON - Free Report) reported second-quarter 2026 adjusted earnings of $1.95 per share, which surpassed the Zacks Consensus Estimate of $1.80. The bottom line increased 10% year over year on an adjusted basis. On a reported basis, the company’s earnings were $16.65 per share compared with $1.21 in the year-ago quarter, reflecting the impact of a one-time gain related to the deconsolidation of Quantinuum.
Total revenues of $5.19 billion surpassed the consensus estimate of $4.98 billion. The top line increased 3% from the year-ago quarter, driven by strength in the Building Automation and Industrial Automation segments. Organic sales increased 4% year over year. Orders rose 16%, while backlog increased 9% to approximately $20 billion.
Including the Honeywell Aerospace business, Honeywell International reported total revenues of $9.72 billion in the second quarter of 2026, up 4% year over year from $9.32 billion.
HON’s Q2 Performance by Business Segment
Following the separation of Honeywell Aerospace on June 29, 2026, the company operates as a pure-play automation business under the segments discussed below.
Industrial Automation revenues declined 5% year over year to $1.50 billion. However, organic sales grew 4% year over year. Organic sales growth was driven by strength in utilities projects, warehouse backlog conversion, and sensing and industrial measurement businesses.
Building Automation revenues totaled $2 billion, up 10% year over year. Organic sales increased 9% year over year. The upside was driven by continued strength in both the building products and building solutions businesses. While sales from the building products business grew 10%, the same from the building solutions business increased 7%, driven by services.
Process Automation and Technology revenues increased 4% to $1.68 billion. However, organic sales fell 1% year over year. The results were driven by continued strength in LNG and a return to growth in automation projects. However, lower catalyst shipments compared with the year-ago quarter offset the gains.
Honeywell Technologies Price, Consensus and EPS Surprise
Including the Honeywell Aerospace business, the company’s total cost of sales, comprising the cost of products and services sold, was about $6.07 billion, up 7.2% year over year. Selling, general and administrative expenses were $1.34 billion, down 1.3% year over year. Interest expenses and other financial charges were $363 million, reflecting an increase of 10.3% year over year.
Operating income was $1.74 billion, down 5.8% year over year. The operating income margin was 17.9% compared with 19.8% in the year-ago period.
Excluding the Honeywell Aerospace business, operating income was $662 million, down 0.6% year over year. The operating income margin was 12.8% compared with 13.3% in the year-ago period.
HON’s Balance Sheet & Cash Flow
Including the Honeywell Aerospace business, HON had cash and cash equivalents of $8.75 billion at the end of the second quarter of 2026 compared with $12.49 billion at the end of December 2025. Long-term debt was $26.23 billion, lower than $27.14 billion at 2025-end.
Excluding the Honeywell Aerospace business, Honeywell Technologies generated $563 million in cash from continuing operating activities in the second quarter of 2026 compared with $187 million in the prior-year period. Capital expenditures totaled $187 million compared with $108 million in the prior-year quarter. Free cash flow was $456 million compared with $114 million in the year-ago quarter.
Q3 Guidance by HON
For the third quarter of 2026, Honeywell Technologies expects sales to be in the range of $4.9-$5 billion. Organic sales are expected to increase 4-6%.
HON expects a segment margin of 20-20.7%. The metric indicates an increase of 240-310 basis points year over year. Adjusted earnings per share are expected to be between $2.05 and $2.20. The metric indicates an increase of 21-29% on a year-over-year basis.
The adjusted effective tax rate is expected to be approximately 17%.
Q4 Guidance by HON
For the fourth quarter of 2026, Honeywell Technologies expects sales to be in the range of $5-$5.1 billion. Organic sales are expected to increase 4-6%.
HON expects a segment margin of 22-22.7%. The metric indicates an increase of 400-470 basis points year over year. Adjusted earnings per share are expected to be between $2.28 and $2.43. The metric indicates an increase of 25-33% on a year-over-year basis.
The adjusted effective tax rate is expected to be approximately 17%.
Honeywell’s 2026 Outlook
For 2026, Honeywell Technologies raised its organic sales growth, segment margin and adjusted earnings outlook. Excluding the Honeywell Aerospace business, the company expects sales to be in the range of $19.8-$20 billion compared with the previous projection of $19.9-$20.2 billion. The lower sales forecast reflects the earlier-than-expected divestitures of the Productivity Solutions and Services and Warehouse and Workflow Solutions businesses.
Organic sales are expected to increase 3-4%, up from the prior projection of 2-3%. HON expects a segment margin of 20.1-20.5%. The metric indicates an increase of 250-290 basis points year over year.
Adjusted earnings per share are expected to be between $8.05 and $8.35, up from the previous projection of $7.90-$8.30. The metric indicates an increase of 25-29% on a year-over-year basis.
Free cash flow is expected to be approximately $2 billion. The outlook includes the projected results of the Johnson Matthey Catalyst Technologies business following the completion of the acquisition on July 17, 2026.
HON’s Zacks Rank & Key Picks
The company currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks are discussed below.
MMM delivered a trailing four-quarter average earnings surprise of 4.1%. In the past 60 days, the Zacks Consensus Estimate for 3M’s 2026 earnings has increased 0.9%.
Applied Industrial Technologies (AIT - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 4.0%.
The Zacks Consensus Estimate for AIT’s fiscal 2026 (ended June 2026) earnings has improved by a penny in the past 60 days.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.3%.
In the past 60 days, the consensus estimate for CR’s 2026 earnings has increased by 0.3%.
View the Zacks #1 Rank List
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HON Q2 Earnings Beat on Automation Growth, Outlook Raised
Key Takeaways
Honeywell Technologies (HON - Free Report) reported second-quarter 2026 adjusted earnings of $1.95 per share, which surpassed the Zacks Consensus Estimate of $1.80. The bottom line increased 10% year over year on an adjusted basis. On a reported basis, the company’s earnings were $16.65 per share compared with $1.21 in the year-ago quarter, reflecting the impact of a one-time gain related to the deconsolidation of Quantinuum.
Total revenues of $5.19 billion surpassed the consensus estimate of $4.98 billion. The top line increased 3% from the year-ago quarter, driven by strength in the Building Automation and Industrial Automation segments. Organic sales increased 4% year over year. Orders rose 16%, while backlog increased 9% to approximately $20 billion.
Including the Honeywell Aerospace business, Honeywell International reported total revenues of $9.72 billion in the second quarter of 2026, up 4% year over year from $9.32 billion.
HON’s Q2 Performance by Business Segment
Following the separation of Honeywell Aerospace on June 29, 2026, the company operates as a pure-play automation business under the segments discussed below.
Industrial Automation revenues declined 5% year over year to $1.50 billion. However, organic sales grew 4% year over year. Organic sales growth was driven by strength in utilities projects, warehouse backlog conversion, and sensing and industrial measurement businesses.
Building Automation revenues totaled $2 billion, up 10% year over year. Organic sales increased 9% year over year. The upside was driven by continued strength in both the building products and building solutions businesses. While sales from the building products business grew 10%, the same from the building solutions business increased 7%, driven by services.
Process Automation and Technology revenues increased 4% to $1.68 billion. However, organic sales fell 1% year over year. The results were driven by continued strength in LNG and a return to growth in automation projects. However, lower catalyst shipments compared with the year-ago quarter offset the gains.
Honeywell Technologies Price, Consensus and EPS Surprise
Honeywell International Inc. price-consensus-eps-surprise-chart | Honeywell International Inc. Quote
Costs & Margins of HON
Including the Honeywell Aerospace business, the company’s total cost of sales, comprising the cost of products and services sold, was about $6.07 billion, up 7.2% year over year. Selling, general and administrative expenses were $1.34 billion, down 1.3% year over year. Interest expenses and other financial charges were $363 million, reflecting an increase of 10.3% year over year.
Operating income was $1.74 billion, down 5.8% year over year. The operating income margin was 17.9% compared with 19.8% in the year-ago period.
Excluding the Honeywell Aerospace business, operating income was $662 million, down 0.6% year over year. The operating income margin was 12.8% compared with 13.3% in the year-ago period.
HON’s Balance Sheet & Cash Flow
Including the Honeywell Aerospace business, HON had cash and cash equivalents of $8.75 billion at the end of the second quarter of 2026 compared with $12.49 billion at the end of December 2025. Long-term debt was $26.23 billion, lower than $27.14 billion at 2025-end.
Excluding the Honeywell Aerospace business, Honeywell Technologies generated $563 million in cash from continuing operating activities in the second quarter of 2026 compared with $187 million in the prior-year period. Capital expenditures totaled $187 million compared with $108 million in the prior-year quarter. Free cash flow was $456 million compared with $114 million in the year-ago quarter.
Q3 Guidance by HON
For the third quarter of 2026, Honeywell Technologies expects sales to be in the range of $4.9-$5 billion. Organic sales are expected to increase 4-6%.
HON expects a segment margin of 20-20.7%. The metric indicates an increase of 240-310 basis points year over year. Adjusted earnings per share are expected to be between $2.05 and $2.20. The metric indicates an increase of 21-29% on a year-over-year basis.
The adjusted effective tax rate is expected to be approximately 17%.
Q4 Guidance by HON
For the fourth quarter of 2026, Honeywell Technologies expects sales to be in the range of $5-$5.1 billion. Organic sales are expected to increase 4-6%.
HON expects a segment margin of 22-22.7%. The metric indicates an increase of 400-470 basis points year over year. Adjusted earnings per share are expected to be between $2.28 and $2.43. The metric indicates an increase of 25-33% on a year-over-year basis.
The adjusted effective tax rate is expected to be approximately 17%.
Honeywell’s 2026 Outlook
For 2026, Honeywell Technologies raised its organic sales growth, segment margin and adjusted earnings outlook. Excluding the Honeywell Aerospace business, the company expects sales to be in the range of $19.8-$20 billion compared with the previous projection of $19.9-$20.2 billion. The lower sales forecast reflects the earlier-than-expected divestitures of the Productivity Solutions and Services and Warehouse and Workflow Solutions businesses.
Organic sales are expected to increase 3-4%, up from the prior projection of 2-3%. HON expects a segment margin of 20.1-20.5%. The metric indicates an increase of 250-290 basis points year over year.
Adjusted earnings per share are expected to be between $8.05 and $8.35, up from the previous projection of $7.90-$8.30. The metric indicates an increase of 25-29% on a year-over-year basis.
Free cash flow is expected to be approximately $2 billion. The outlook includes the projected results of the Johnson Matthey Catalyst Technologies business following the completion of the acquisition on July 17, 2026.
HON’s Zacks Rank & Key Picks
The company currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks are discussed below.
3M Company (MMM - Free Report) currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MMM delivered a trailing four-quarter average earnings surprise of 4.1%. In the past 60 days, the Zacks Consensus Estimate for 3M’s 2026 earnings has increased 0.9%.
Applied Industrial Technologies (AIT - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 4.0%.
The Zacks Consensus Estimate for AIT’s fiscal 2026 (ended June 2026) earnings has improved by a penny in the past 60 days.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.3%.
In the past 60 days, the consensus estimate for CR’s 2026 earnings has increased by 0.3%.