Industrial Automation Segment Under Pressure
Honeywell International Inc. (HON) continues to experience weakness in its Industrial Automation segment. In the second quarter of 2025, segment sales declined 5% year over year, with organic sales remaining flat. This follows a 4% drop in the first quarter, signaling persistent softness across the segment’s core operations.
Key Challenges Impacting Performance
A major headwind lies in the warehouse and workflow solutions business, which recorded a 4% year-over-year decline in Q2. The delay in executing large projects has constrained growth. Additionally, the Productivity Solutions and Services unit saw sales fall 7% year over year, primarily due to subdued demand in the European market. Lower license and settlement payments have further weighed on overall performance. For 2025, Honeywell expects organic sales in Industrial Automation to decline in the low to mid-single digits.
Strength from Aerospace Technologies
While Industrial Automation struggles, Honeywell’s Aerospace Technologies segment remains a bright spot. Strong demand from the commercial aviation aftermarket, defense, and space sectors has fueled consistent growth. Increasing global air traffic and renewed fleet investments are bolstering this segment’s momentum.
Building Automation Gains Ground
Honeywell’s Building Automation segment is benefiting from robust demand for smart building solutions. Expanding construction activity in North America, the Middle East, and India has driven orders for Honeywell’s advanced products and systems, reinforcing its leadership in energy-efficient and connected building technologies.
Peer Comparison: 3M and GE Aerospace
Among peers, 3M Company’s Transportation and Electronics segment showed a 1% organic revenue increase in Q2 2025, supported by strong performance in transportation, aerospace, and electronics markets.
Meanwhile, GE Aerospace posted an impressive 30% year-over-year revenue jump in its Commercial Engines & Services division, driven by high demand for LEAP, GEnx, and GE9X engines and a landmark deal with Qatar Airways for over 400 engines.
Stock Performance and Valuation Overview
Over the past year, Honeywell’s stock has edged up 1.8%, outperforming the industry’s overall decline of 3.4%. The company trades at a forward P/E ratio of 18.73x, slightly above the industry average of 16.21x, indicating a premium valuation. Honeywell holds a Zacks Rank #3 (Hold) and a Value Score of D, reflecting moderate investor sentiment. Notably, earnings estimates for 2025 have risen 1.1% over the past 60 days.