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HON vs. EMR: Which Automation Stock Has Better Growth Potential?
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Key Takeaways
HON sees growth in Building and Industrial Automation, but Process Automation remains weak.
EMR's sales are benefiting from power, LNG, aerospace, defense and semiconductor demand.
EMR's acquisitions are expanding its automation portfolio, while rising costs remain a concern.
Honeywell Technologies (HON - Free Report) and Emerson Electric (EMR - Free Report) are prominent players in the industrial automation market. The companies are benefiting from growing investments in smart manufacturing, digital transformation and process automation. Both companies are expanding their automation portfolios through software, connected technologies and strategic growth initiatives.
HON is gaining from strength in its Industrial Automation, Building Automation, and Energy & Sustainability Solutions businesses, while EMR continues to benefit from portfolio optimization and growing demand across process and discrete automation markets.
But which stock offers better growth potential for investors? Let's take a closer look.
The Case for HON
Honeywell Technologies has been facing weakness in its Process Automation and Technology segment. In the second quarter of 2026, the segment’s organic revenues declined 1% year over year due to a 6% decline in aftermarket organic sales, reflecting lower refining catalyst shipments and project delays. Lower customer demand in the Middle East amid ongoing geopolitical tensions also weighed on the segment’s performance. However, rising demand for liquefied natural gas (LNG) and increased automation projects are expected to support growth.
Honeywell Technologies has been dealing with the adverse impacts of the high cost of sales and operating expenses. On a consolidated basis, the company’s total cost of sales, comprising the cost of products and services sold, was up 7.2% year over year in the second quarter. In the same period, research and development expenses surged 14.2% year over year. Its operating margin fell 190 basis points to 17.9%.
The company incurred high costs and expenses related to rising direct and indirect material costs, increased labor costs, investment in digital infrastructure and business integration activities. For standalone Honeywell Technologies, operating margin declined 50 basis points to 12.8% in the second quarter. Escalating expenses, if not controlled, are likely to hurt the company’s bottom line in the quarters ahead.
At the end of the second quarter of 2026, HON’s consolidated long-term debt stood at $26.2 billion, primarily due to funds raised for the Aerospace business spin-off. Against this debt burden, cash and cash equivalents of $8.8 billion appear relatively modest. Interest expenses and other financial charges remained elevated at $363 million in the second quarter, up 10.3% year over year. Including current maturities, Honeywell Technologies’ total debt stood at $31.5 billion at the end of the quarter. Elevated debt could increase financial obligations and put pressure on profitability in the coming quarters.
However, increased demand for HON’s products and solutions, supported by rising building activity across the Americas, India and the Middle East, is likely to benefit the Building Automation segment. Higher order rates and increased capital investments in data centers and hospitality are also supporting growth. In the second quarter of 2026, the Building Automation segment’s organic revenues increased 9% year over year.
Also, the Industrial Automation segment is benefiting from favorable utilities project timing and solid momentum in sensing and industrial measurement, with organic revenues rising 4% year over year in the second quarter. Exiting the quarter, standalone Honeywell Technologies had a backlog of approximately $20 billion, supported by 16% organic order growth. For 2026, the company expects revenues of $19.8-$20.0 billion, with organic revenues projected to grow 3-4% year over year.
On June 29, HON became a separate public company following the spin-off of the Aerospace Technologies business from Honeywell International. This marked the completion of Honeywell’s multi-year portfolio restructuring, creating three stand-alone publicly traded companies. The move allows Honeywell Technologies to sharpen its focus on industrial automation and benefit from improved operational focus, capital allocation and financial flexibility.
The Case for EMR
Emerson has been experiencing healthy demand across most of its end markets. The company’s underlying sales increased 6% year over year in the third quarter of fiscal 2026. The company anticipates its overall underlying sales to grow approximately 3.5% year over year in fiscal 2026. Strength in power, life sciences, aerospace and defense, semiconductor and LNG end markets continues to support growth across key businesses.
Also, the company is benefiting from the performance of the Intelligent Devices and Software & Systems groups. Within the Intelligent Devices group, it is seeing strength in the Final Control segment, driven by momentum in power end markets. Sales from this segment increased 4% year over year in the fiscal third quarter. Growth across the Americas, including strength in power and LNG, is aiding the Sensors segment, whose sales rose 8% year over year in the fiscal quarter.
Within the Software & Systems group, strength in the power end market is supporting the Control Systems & Software segment. Sales from the segment increased 7% year over year in the fiscal third quarter. Strength in the aerospace & defense and semiconductor end markets is aiding the Test & Measurement segment. The segment’s sales surged 23% year over year in the quarter. Growth across the Americas is buoying the Safety & Productivity segment’s performance. The segment’s sales increased 3% year over year in the fiscal third quarter. Given the strength across its end markets, Emerson expects net sales to increase approximately 5% year over year in fiscal 2026.
Emerson believes in expanding its market presence, solidifying its customer base and enhancing product offerings through acquisitions. In August 2026, Emerson’s acquisition of Glue Inc. enhanced its Test & Measurement business by adding AI-enabled capabilities for test generation, planning and validation. The acquisition strengthened the company’s NI portfolio and complements its Nigel AI platform.
In March 2025, the company acquired all outstanding shares of Aspen Technology’s common stock that it did not own. It is worth noting that Emerson acquired a 55% majority stake in AspenTech in 2022, later increasing its ownership to around 57%. With the close of this buyout, AspenTech now operates as a fully owned subsidiary of Emerson. The inclusion of AspenTech boosted the company’s automation portfolio and expanded its reach into new markets. It enabled Emerson to advance its capabilities in software-defined control under industrial automation.
EMR is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. In the first nine months of fiscal 2026, it paid out dividends of $935 million and repurchased common stocks worth $898 million. In November 2025, the company hiked its dividend. Emerson plans to repurchase shares worth approximately $1 billion and pay out dividends of about $1.2 billion in fiscal 2026. For fiscal 2026, it expects a free cash flow of approximately $3.6 billion.
However, Emerson has been experiencing rising expenses for a while. The company’s cost of sales increased 2.7% year over year in the third quarter of fiscal 2026. Its selling, general and administrative expenses increased 6.1% in the same period. However, SG&A expenses as a percentage of sales declined 20 basis points, reflecting leverage on higher sales and savings from cost-reduction actions.
The company’s operations are spread across the world, the majority of which are outside the United States. Therefore, it is exposed to global economic and political risks as well as unfavorable movements in foreign currencies. A stronger U.S. dollar may depress the company's overseas business results in the quarters ahead.
How Does the Zacks Consensus Estimate Compare for HON & EMR?
While the Zacks Consensus Estimate for HON’s 2026 sales implies a year-over-year decrease of 49.5%, the same for its earnings per share (EPS) indicates a decline of 57.8%. The EPS estimates for 2026 and 2027 have decreased over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for EMR’s fiscal 2026 sales and EPS implies year-over-year growth of 4.7% and 8.8%, respectively. Emerson’s EPS estimates for fiscal 2026 and fiscal 2027 have increased over the past 60 days.
Image Source: Zacks Investment Research
Price Performance and Valuation of HON & EMR
In the past month, Honeywell Technologies shares have declined 10.7%, while Emerson stock has gained 4.2%.
Image Source: Zacks Investment Research
Honeywell Technologies is trading at a forward 12-month price-to-earnings ratio of 23.36X, above its median of 20.40X over the last five years. Emerson’s forward earnings multiple sits at 22.29X, above its median of 19.62X over the same time frame.
Image Source: Zacks Investment Research
Final Take
HON faces near-term pressure from weak Process Automation demand, rising costs and elevated debt, which could weigh on profitability. However, strong momentum in the Building and Industrial Automation segment, supported by robust order growth and backlog, provides a key growth cushion.
In contrast, Emerson is benefiting from healthy demand across key end markets, with strength in power, LNG, aerospace and defense, semiconductors and life sciences. Strategic acquisitions are strengthening its automation, AI and software capabilities. However, rising costs and SG&A expenses remain concerns, although operating leverage and cost-reduction initiatives are helping mitigate the impact.
Considering EMR’s stronger recent stock performance, broader end-market momentum and improving earnings outlook, it appears to be a better investment choice than HON at present. While EMR currently carries a Zacks Rank #3 (Hold), HON has a Zacks Rank #5 (Strong Buy).
View the Zacks #1 Rank List
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HON vs. EMR: Which Automation Stock Has Better Growth Potential?
Key Takeaways
Honeywell Technologies (HON - Free Report) and Emerson Electric (EMR - Free Report) are prominent players in the industrial automation market. The companies are benefiting from growing investments in smart manufacturing, digital transformation and process automation. Both companies are expanding their automation portfolios through software, connected technologies and strategic growth initiatives.
HON is gaining from strength in its Industrial Automation, Building Automation, and Energy & Sustainability Solutions businesses, while EMR continues to benefit from portfolio optimization and growing demand across process and discrete automation markets.
But which stock offers better growth potential for investors? Let's take a closer look.
The Case for HON
Honeywell Technologies has been facing weakness in its Process Automation and Technology segment. In the second quarter of 2026, the segment’s organic revenues declined 1% year over year due to a 6% decline in aftermarket organic sales, reflecting lower refining catalyst shipments and project delays. Lower customer demand in the Middle East amid ongoing geopolitical tensions also weighed on the segment’s performance. However, rising demand for liquefied natural gas (LNG) and increased automation projects are expected to support growth.
Honeywell Technologies has been dealing with the adverse impacts of the high cost of sales and operating expenses. On a consolidated basis, the company’s total cost of sales, comprising the cost of products and services sold, was up 7.2% year over year in the second quarter. In the same period, research and development expenses surged 14.2% year over year. Its operating margin fell 190 basis points to 17.9%.
The company incurred high costs and expenses related to rising direct and indirect material costs, increased labor costs, investment in digital infrastructure and business integration activities. For standalone Honeywell Technologies, operating margin declined 50 basis points to 12.8% in the second quarter. Escalating expenses, if not controlled, are likely to hurt the company’s bottom line in the quarters ahead.
At the end of the second quarter of 2026, HON’s consolidated long-term debt stood at $26.2 billion, primarily due to funds raised for the Aerospace business spin-off. Against this debt burden, cash and cash equivalents of $8.8 billion appear relatively modest. Interest expenses and other financial charges remained elevated at $363 million in the second quarter, up 10.3% year over year. Including current maturities, Honeywell Technologies’ total debt stood at $31.5 billion at the end of the quarter. Elevated debt could increase financial obligations and put pressure on profitability in the coming quarters.
However, increased demand for HON’s products and solutions, supported by rising building activity across the Americas, India and the Middle East, is likely to benefit the Building Automation segment. Higher order rates and increased capital investments in data centers and hospitality are also supporting growth. In the second quarter of 2026, the Building Automation segment’s organic revenues increased 9% year over year.
Also, the Industrial Automation segment is benefiting from favorable utilities project timing and solid momentum in sensing and industrial measurement, with organic revenues rising 4% year over year in the second quarter. Exiting the quarter, standalone Honeywell Technologies had a backlog of approximately $20 billion, supported by 16% organic order growth. For 2026, the company expects revenues of $19.8-$20.0 billion, with organic revenues projected to grow 3-4% year over year.
On June 29, HON became a separate public company following the spin-off of the Aerospace Technologies business from Honeywell International. This marked the completion of Honeywell’s multi-year portfolio restructuring, creating three stand-alone publicly traded companies. The move allows Honeywell Technologies to sharpen its focus on industrial automation and benefit from improved operational focus, capital allocation and financial flexibility.
The Case for EMR
Emerson has been experiencing healthy demand across most of its end markets. The company’s underlying sales increased 6% year over year in the third quarter of fiscal 2026. The company anticipates its overall underlying sales to grow approximately 3.5% year over year in fiscal 2026. Strength in power, life sciences, aerospace and defense, semiconductor and LNG end markets continues to support growth across key businesses.
Also, the company is benefiting from the performance of the Intelligent Devices and Software & Systems groups. Within the Intelligent Devices group, it is seeing strength in the Final Control segment, driven by momentum in power end markets. Sales from this segment increased 4% year over year in the fiscal third quarter. Growth across the Americas, including strength in power and LNG, is aiding the Sensors segment, whose sales rose 8% year over year in the fiscal quarter.
Within the Software & Systems group, strength in the power end market is supporting the Control Systems & Software segment. Sales from the segment increased 7% year over year in the fiscal third quarter. Strength in the aerospace & defense and semiconductor end markets is aiding the Test & Measurement segment. The segment’s sales surged 23% year over year in the quarter. Growth across the Americas is buoying the Safety & Productivity segment’s performance. The segment’s sales increased 3% year over year in the fiscal third quarter. Given the strength across its end markets, Emerson expects net sales to increase approximately 5% year over year in fiscal 2026.
Emerson believes in expanding its market presence, solidifying its customer base and enhancing product offerings through acquisitions. In August 2026, Emerson’s acquisition of Glue Inc. enhanced its Test & Measurement business by adding AI-enabled capabilities for test generation, planning and validation. The acquisition strengthened the company’s NI portfolio and complements its Nigel AI platform.
In March 2025, the company acquired all outstanding shares of Aspen Technology’s common stock that it did not own. It is worth noting that Emerson acquired a 55% majority stake in AspenTech in 2022, later increasing its ownership to around 57%. With the close of this buyout, AspenTech now operates as a fully owned subsidiary of Emerson. The inclusion of AspenTech boosted the company’s automation portfolio and expanded its reach into new markets. It enabled Emerson to advance its capabilities in software-defined control under industrial automation.
EMR is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. In the first nine months of fiscal 2026, it paid out dividends of $935 million and repurchased common stocks worth $898 million. In November 2025, the company hiked its dividend. Emerson plans to repurchase shares worth approximately $1 billion and pay out dividends of about $1.2 billion in fiscal 2026. For fiscal 2026, it expects a free cash flow of approximately $3.6 billion.
However, Emerson has been experiencing rising expenses for a while. The company’s cost of sales increased 2.7% year over year in the third quarter of fiscal 2026. Its selling, general and administrative expenses increased 6.1% in the same period. However, SG&A expenses as a percentage of sales declined 20 basis points, reflecting leverage on higher sales and savings from cost-reduction actions.
The company’s operations are spread across the world, the majority of which are outside the United States. Therefore, it is exposed to global economic and political risks as well as unfavorable movements in foreign currencies. A stronger U.S. dollar may depress the company's overseas business results in the quarters ahead.
How Does the Zacks Consensus Estimate Compare for HON & EMR?
While the Zacks Consensus Estimate for HON’s 2026 sales implies a year-over-year decrease of 49.5%, the same for its earnings per share (EPS) indicates a decline of 57.8%. The EPS estimates for 2026 and 2027 have decreased over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for EMR’s fiscal 2026 sales and EPS implies year-over-year growth of 4.7% and 8.8%, respectively. Emerson’s EPS estimates for fiscal 2026 and fiscal 2027 have increased over the past 60 days.
Image Source: Zacks Investment Research
Price Performance and Valuation of HON & EMR
In the past month, Honeywell Technologies shares have declined 10.7%, while Emerson stock has gained 4.2%.
Image Source: Zacks Investment Research
Honeywell Technologies is trading at a forward 12-month price-to-earnings ratio of 23.36X, above its median of 20.40X over the last five years. Emerson’s forward earnings multiple sits at 22.29X, above its median of 19.62X over the same time frame.
Image Source: Zacks Investment Research
Final Take
HON faces near-term pressure from weak Process Automation demand, rising costs and elevated debt, which could weigh on profitability. However, strong momentum in the Building and Industrial Automation segment, supported by robust order growth and backlog, provides a key growth cushion.
In contrast, Emerson is benefiting from healthy demand across key end markets, with strength in power, LNG, aerospace and defense, semiconductors and life sciences. Strategic acquisitions are strengthening its automation, AI and software capabilities. However, rising costs and SG&A expenses remain concerns, although operating leverage and cost-reduction initiatives are helping mitigate the impact.
Considering EMR’s stronger recent stock performance, broader end-market momentum and improving earnings outlook, it appears to be a better investment choice than HON at present. While EMR currently carries a Zacks Rank #3 (Hold), HON has a Zacks Rank #5 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.