Honeywell's Stock Is About as Cheap as It's Been Since 2020. 1 Thing to Know Before You Buy.

Core Viewpoint - Honeywell International is experiencing a disconnect between its high-growth potential and its current stock valuation, trading at 24 times earnings, which is 30% lower than its 2021 multiple, despite management's plans to address this issue [1][2]. Group 1: Company Performance - Honeywell is a conglomerate focused on manufacturing engineered components for high-growth industrial markets, but it has been underperforming, with earnings guidance for Q1 and the full year falling significantly below Wall Street expectations [2]. - The company is perceived to suffer from a "conglomerate discount," where the market undervalues the stock due to the obscured strengths of its individual business units [3]. Group 2: Strategic Plans - In February, Honeywell announced plans to split into three independent companies focused on advanced materials, automation, and aerospace, aiming to eliminate competition for capital and resources among its units [4]. - The CEO emphasized that this separation will enhance capital allocation strategies and unlock the potential of each company's strong balance sheet, leading to improved commercial success and innovation [5]. Group 3: Historical Context - Honeywell has previously attempted a similar strategy with the spinoffs of Resideo Technologies and Garrett Motion in 2018, which did not yield positive results [6]. - The current planned breakup differs from past efforts as it aims to clarify the strengths of individual businesses, potentially rewarding investors in the future if successful [7].