HON
Honeywell
Hybrid Industrial
★ Quality 45/100Price today
$209.61
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What this business is made of
The business
Sells the plane cheap and charges for the parts for decades.
Honeywell sells industrial automation, aerospace, control materials, and energy solutions. It charges for equipment, embedded software, and recurring service contracts — the long-tail parts and maintenance are worth more than the initial sale. 2025 revenue: $37.4B spread across four diversified segments.
The real moat is in aerospace: once your avionics fly in a fleet, certification and switching costs lock in decades of parts. The rest of the conglomerate competes in fragmented markets with no obvious moat. That's why the model flags it as a non-dominant moat.
Revenue history
From $35.5B to $38.1B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $37.4B · FY2025
Of every $100 in sales, $87 goes to costs and operations; $13 is left as net profit (13% margin).
Catalysts and risks
Spin-off of Aerospace and Advanced Materials announced, expected to close in the second half of 2026.
FCF of $5.4B supports buybacks and dividend with $12.5B in cash available.
Post-pandemic aerospace cycle: engine and avionics aftermarket growing double digits.
Reported gross margin of 9% — thin industrial margins, little cushion against input inflation.
Debt of $27.1B against $12.5B in cash; the corporate split could leave stretched balance sheets.
Revenue CAGR of 2% — this grows at GDP pace, no faster.
Charlie's note
“You pay a bit over thirteen times earnings for a conglomerate growing at 2% with thin 9% gross margins; the only thing justifying the figure is the aerospace parts tail, but the rest competes without a moat. The right multiple demands patience, not enthusiasm.”
Analysis · June 2026
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