Should You Pick Honeywell Stock Over Its Competitors

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If you are choosing among large industrial stocks, Honeywell International (HON) looks hard to pass over on paper. Honeywell's reported figures put it first on revenue growth within a group of six industrial companies, but its latest four quarters straddle its June 2026 aerospace spin-off, so that lead is not a fair comparison. Its shares rank only fourth on total return over the past year. So how does Honeywell's year look beside the rival whose shares did best?

How Does Honeywell Compare With Johnson Controls?

Based on price to earnings, Honeywell looks far cheaper to you at 9.9, against 26.7 for Johnson Controls. The two are not comparable, however. Honeywell posted a net loss of $115 million in fiscal Q4 2025. At the other extreme, fiscal Q2 2026 alone accounted for $5.68 billion of its $7.05 billion in net income over the four quarters, meaning a single quarter supplied most of the profit behind that P/E.

Where Honeywell's Revenue Growth Came From

One outsized quarter within its latest twelve months accounts for Honeywell's growth lead. Our quarterly data show $22.7 billion of revenue for fiscal Q4 2025, but that entry cannot be a true quarter. Added to the other three quarters, it would put fiscal 2025 well above the $37.4 billion in revenue Honeywell reported for the year. Throughout the three quarters of 2026, reported revenue growth ran between 1.3% and 4.3%. News reports on October 22 also noted that fiscal Q3 2026 was Honeywell's first quarter as a standalone company after the aerospace spin-off.

Management's own measure of organic sales growth depicts a business expanding at a steady single-digit pace. Organic sales rose 7% in the third quarter as every segment grew, management said on the October 22 call. Building Automation grew 8% organically, marking its eighth straight quarter of high-single-digit growth, with product sales led by the fire and security businesses. Within process automation and technology, project sales rose 14% on LNG and petrochemical work, and management put refining catalyst growth at 80%. Industrial Automation grew more slowly at 4%, with product sales roughly flat.

Reported profit was thinner in the latest quarter. Honeywell recorded an operating margin of 14.8% in fiscal Q3 2026, falling below its figure for the four quarters. Under management's adjusted measure, segment margin expanded 370 basis points to 21.3%.

What Has Honeywell Guided For 2026?

Management raised its outlook on the October 22 call. It now expects 2026 organic growth of 4% to 5%, up from the 3% to 4% guided previously. For the fourth quarter alone, it guides 5% to 6%, a forecast slightly below the third quarter's pace. Management also raised its 2026 adjusted earnings per share guide to $8.43 at the midpoint, from $8.20.

The risk is in the process business. Margins there shrank in the third quarter on a heavier mix of project work and the Catalyst Technologies acquisition, management said, and it expects a similar trend in the first half of 2027 before margins expand in the second half. Management also expects inflation to stay at current levels at least into the first half of 2027.

To earn a place ahead of its rivals on results, Honeywell, now a standalone company, must keep growing organic sales and widening its margins without one outsized quarter in its figures. The third quarter's organic growth supports that so far, but it is only one quarter. When Honeywell reports in January 2027, organic sales growth for the fourth quarter will be the number to watch.

How To Act On HON?

Not necessarily on Honeywell International alone, if your goal is long-term wealth. Wealth is built by owning the companies that keep outperforming: the leaders of their industries. Finding them takes comparison, a company against its peers and its industry against the rest of the market, not one stock against its own past.

The Trefis High Quality (HQ) Portfolio looks for these quality leaders across industries and sectors and holds 30 of them in equal weight. Since its inception in September 2020 it has returned more than 105%, ahead of a benchmark that combines the S&P 500, S&P Mid-cap and Russell 2000. See how we find the leaders.

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