Honeywell (HON) Slides 6% As Middle East Conflicts Undermine Outlook

TLDR

• Honeywell’s first-quarter net sales of $9.14 billion fell short of the $9.3 billion analyst projection, marking the third consecutive quarter of missing expectations.
• Revenue was negatively impacted as activity in its process automation and technology segment slowed due to the Middle East conflict.
• Net income declined 43.3% to $821 million, although adjusted earnings per share increased 11% to $2.45, surpassing estimates.
• Second-quarter guidance fell below Wall Street predictions, with EPS projected between $2.35 and $2.45, compared to the $2.56 estimate.
• The spinoff of the aerospace business has been accelerated to June 29, and Quantinuum submitted its initial public offering registration.

(SeaPRwire) –   Honeywell International (HON) shares declined over 6% in Thursday’s premarket trading after the company reported first-quarter sales below expectations for the third quarter in a row, with the Middle East conflict having a direct negative impact on operations.

Honeywell International Inc., HON

First-quarter net sales increased 2.4% year-over-year to $9.14 billion, missing the FactSet consensus estimate of $9.3 billion. This shortfall was partly attributable to Honeywell’s process automation and technology unit, which experienced a “slowdown in activity in the Middle East stemming from the conflict.” The firm identified supply-chain issues and a “challenging geopolitical environment” as primary reasons.

HONEYWELL $HON Q1’26 EARNINGS HIGHLIGHTS

Revenue: $9.14B (Est. $9.28B) ; +2% Y/Y
Adj. EPS: $2.45 (Est. $2.32) ; +11% Y/Y
Orders: +7% organically; backlog $38.3B
Operating margin: 16.1%; -320 bps Y/Y
Aerospace spin-off timing: June 29, 2026 (planned)

FY Guide:… pic.twitter.com/Jqq9hA8eWL

— Wall St Engine (@wallstengine) April 23, 2026

Net income decreased 43.3% to $821 million, burdened by charges associated with debt restructuring and asset impairments for businesses designated for sale. Free cash flow of $100 million also declined compared to the previous year, partly because of delayed customer payments connected to the conflict.

Earnings Beat, But Outlook Disappoints

On an adjusted basis, earnings per share climbed 11% to $2.45, exceeding the FactSet estimate of $2.32. This represents the seventh consecutive quarter of beating profit expectations.

However, it was the future outlook that prompted a market reaction. Honeywell anticipates second-quarter EPS to be in the $2.35 to $2.45 range, significantly lower than the Wall Street forecast of $2.56. Second-quarter sales are forecast between $9.4 billion and $9.6 billion, also below the consensus of $9.73 billion.

The full-year outlook was maintained, with sales projected to be between $38.8 billion and $39.8 billion, and adjusted EPS expected from $10.35 to $10.65.

Revenue from defense and space operations did rise 4% compared to the previous year, with the company noting “escalating geopolitical conflicts” as a contributing factor. However, this growth was insufficient to counterbalance weaknesses in other business areas.

The premarket decline positioned the stock for its most significant single-day drop following an earnings report since February 3, 2022, when it fell 7.6%.

Since the beginning of the Iran conflict through Wednesday, HON has decreased 9.7%. The iShares U.S. Aerospace & Defense ETF (ITA) lost 10.1% over the same timeframe. For the year to date, HON remains up 12.8%, versus a 4.3% increase for the S&P 500.

Spinoff and Asset Sales Move Forward

Honeywell also provided an update on its corporate restructuring schedule. The aerospace spinoff is now anticipated to be completed on June 29, an earlier date than the prior target in the third quarter.

On Wednesday, Quantinuum, its quantum-computing division, filed documentation for an initial public offering.

The company also confirmed an agreement to sell its Warehouse and Workflow Solutions business to American Industrial Partners in an all-cash deal. This sale, together with the previously disclosed sale of its Productivity Solutions and Services (PSS) business, is anticipated to be finalized in the latter half of 2026.

Since reaching its recent peaks, HON stock is down 12% year to date.