Key Takeaways
- HONA shares plunged up to 17% in premarket hours following its inaugural quarterly earnings release as an independent entity
- Second quarter revenue reached $4.52 billion, reflecting 5% annual growth but falling short of the $4.6 billion consensus forecast
- Adjusted earnings per share declined 32% to $1.87, significantly below the full-year analyst projection of $8.86
- The company reduced its 2026 organic revenue growth projection to 4%-5% from the previous 7%-9% estimate
- Ongoing supply chain constraints are compelling the aerospace firm to favor Boeing and Airbus shipments at the expense of its more profitable aftermarket operations
Shares of Honeywell Aerospace (HONA) tumbled as much as 17% during premarket trading Thursday following the release of its debut earnings report since separating from Honeywell Technologies (HON) in June. During early trading, the stock hovered around $177, representing approximately a 13% decline.
The financial results disappointed on multiple fronts. Second quarter revenue totaled $4.52 billion, marking a 5% year-over-year increase but falling below Wall Street’s $4.6 billion projection. Operating income reached $1 billion, declining 7% from the prior year period, compared to analyst expectations of $1.1 billion. Inventory obsolescence expenses contributed to the underperformance.
Adjusted earnings per share decreased 32% annually to $1.87, undershooting forecasts.
The more significant disappointment came from revised projections. Honeywell Aerospace lowered its 2026 organic revenue growth outlook to 4%-5%, down substantially from its earlier 7%-9% estimate. Annual operating income is now anticipated to reach approximately $4.4 billion, below both the previous $4.7 billion projection and the $4.6 billion analyst consensus.
Full-year adjusted earnings per share guidance now stands at $7.60 to $7.90, substantially below the $8.86 Wall Street consensus.
Chief Financial Officer Josh Jepsen explained to Reuters that the reductions directly reflect current supply chain realities. “It’s really resetting the forecast based on what we’re seeing coming through the supply chain,” he stated.
Persistent Supply Chain Headwinds
Ongoing supply chain disruptions are compelling Honeywell Aerospace to prioritize shipments to major OEMs Boeing and Airbus, which is negatively impacting its more lucrative aftermarket segment. This strategic tradeoff is becoming evident in the financial performance.
Melius Research analyst Scott Mikus noted that Honeywell Aerospace achieved 8% growth in commercial aftermarket revenue during the most recent quarter. By comparison, industry competitors reported 23% growth. This significant disparity raises concerns.
Mikus also highlighted that the company’s overdue backlog, exceeding $2 billion, continues expanding. He cautioned that airlines are increasingly utilizing repairs and PMA components to reduce maintenance expenses, and if Honeywell Aerospace cannot resolve its delivery challenges, it may forfeit valuable aftermarket revenue opportunities going forward.
“The acute supply chain issue from last quarter did not improve as much as management had hoped,” Mikus wrote.
Trading Discount Compared to Industry Rivals
Honeywell Aerospace presently trades at approximately 23 times projected 2026 earnings. GE Aerospace commands a 48 times multiple, and GE recently elevated its annual guidance following an 18% year-over-year increase in Q2 operating income.
Vertical Research Partners analyst Rob Stallard suggested the valuation appears attractive but may represent a value trap. He observed that the company has limited participation in faster-growing aerospace segments such as large commercial engines or defense missiles relative to competitors.
“While it is good that Honeywell Aerospace recognizes that it has problems, fixing them will not be an overnight affair,” Stallard wrote.
Prior to Thursday’s session, HONA had already declined approximately 8% since its June spinoff launch, making the post-earnings selloff particularly painful for shareholders who invested at the debut.
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