Honeywell International (HON) is in focus after management advanced the spin off of its Aerospace Technologies unit and set new multi year financial targets tied to software, automation, AI and higher growth industrial projects.

Honeywell International’s recent announcements come after a mixed share price stretch, with the stock at US$233.96 and a 30 day share price return of 3.97%, while the year to date share price return has fallen 40.28%. Over a longer horizon, total shareholder returns of 11.43% over one year and 35.09% over three years suggest investors who stayed invested have seen steadier results despite the more recent loss of momentum.

If Honeywell’s shift toward software, automation and AI has your attention, it can be useful to compare with peers that are earlier in their journey and listed in focused themes like 55 AI infrastructure stocks

Honeywell International now looks like a leaner industrial and software platform on paper, especially with Aerospace Technologies set to stand alone. The real test for investors is whether the current share price reflects that shift yet.

Most Popular Narrative: 26.9% Undervalued

According to the most followed narrative on Honeywell International, a fair value of $320.19 sits well above the recent $233.96 share price, which puts a spotlight on how investors think about the spin off and software driven mix shift.

HON RemainCo is a pure-play industrial automation and energy technology compounder with a confirmed June 29 catalyst, $19B+ in contracted backlog, a sold-out LNG order book, a global SAF technology licensing position, a recurring revenue platform transition underway via Forge, and an embedded position on both sides of the energy transition, all trading at a conglomerate discount that disappears in 53 days.

Want to see how this fair value hangs together? The narrative leans on backlog visibility, margin structure and a very specific view of post spin capital allocation. The assumptions behind that story are doing most of the heavy lifting.

Result: Fair Value of $320.19 (UNDERVALUED)

However, Honeywell International’s story could shift quickly if the planned spin off fails to close as outlined, or if RemainCo is later treated as a slower growth industrial.

Another View On Honeywell International’s Valuation

That 26.9% undervalued narrative leans on a long runway for Honeywell International after the aerospace spin off. Our DCF model points in the other direction. At $233.96, Honeywell trades above an SWS DCF value of $147.70, which screens as overvalued on that framework. Which story do you think fits your expectations for future cash flows?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Honeywell International for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 52 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

The mixed signals around Honeywell International highlight both enthusiasm and concern, so it makes sense to move quickly and test the story against your own expectations using the 3 key rewards and 4 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.