Honeywell International is a diversified industrial technology and software company providing aerospace, building technologies, performance materials and safety solutions, with a financially conservative capital structure and historically strong margins.
The company’s profitability and cash generation remain notable: trailing twelve‑month gross margin is 36.9%, operating margin is 22.4%, and net profit margin is 12.6%, reflecting sustained margin levels above typical industrial peers (Profit Margin Trends). Return on equity has been elevated, with the most recent quarterly ROE at 34.0% (Return on Equity (ROE)). Earnings quality signals are supportive — operating cash flow (TTM) exceeds net income (TTM $5.16B vs net income TTM $4.73B) and free cash flow margin is roughly 12.8%, indicating cash conversion that backs reported profits (Earnings Quality Analysis). The balance sheet shows low leverage with debt-to-equity of 0.1112 and a net-debt metric of 0.00 on the stated measure, implying a manageable debt profile.
At the same time there are clear near‑term stress points. Diluted EPS growth turned sharply negative, with the most recent one‑year EPS change at −17.1% and the quantitative EPS decline signal at −17.11% year‑over‑year (EPS Diluted & Revenue per Share; Revenue & EPS Growth). Revenue per share, which had strengthened into 2025, reversed to −2.7% year over year and current revenue per share sits at $58.25 versus a $63.27 peak in 2025‑09 (EPS Diluted & Revenue per Share; Per Share Levels). The most recent quarter shows a pronounced operational hit: quarterly revenue fell to $6.86B and the company reported a quarterly net loss of $115.0M, after several quarters of profit (Revenue & Net Income). Trailing operating cash flow has also declined from a peak of $7.49B (2025‑09‑30) to $5.16B (TTM), highlighting cash‑flow volatility tied to recent quarter dynamics (Strategic Capital Allocation).
Key fundamentals to monitor going forward are quarterly revenue and net income trends (most recent quarter revenue $6.86B, net income −$115.0M) and the trajectory of operating cash flow (TTM $5.16B) relative to net income (TTM $4.73B), diluted EPS (most recent $7.36) and revenue per share ($58.25). Also watch margin recovery (gross 36.9%, operating 22.4%, net 12.6%) and the evolution of the company’s P/E multiple (most recent 26.5x) as indicators of whether recent weakness is transitory or persistent (Price-to-Earnings (PE) Ratio Trend; Profit Margin Trends).
The foundation of business quality and long-term value creation
HONEYWELL INTERNATIONAL INC showed relatively consistent quarterly revenue around $9–$10.5B across 2023–2025 until the most recent quarter, when revenue dropped to $6.86B. Net income tracked positively through 2023–2025 quarters with recurring profits above $1.4B in several quarters, then swung to a loss in the latest quarter after reporting $1.82B in net income on 2025-09-30 and $1.57B in 2025-06-30.
Historically, revenues have ranged between roughly $7.5B and $10.9B with periodic higher quarters (e.g., mid-2018 and several 2024–2025 quarters) and net income has intermittently spiked (notably $2.86B in 2021-12-31 and $2.66B in 2023-12-31). The primary inflection in the recent series is the sharp quarter-over-quarter decline in revenue and the transition from multi-quarter profits to a net loss in 2025-12-31. The most recent quarterly revenue was $6.86B, and the most recent quarterly net income was a net loss of -$115.0M.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Jan 2025 to Dec 2025, Honeywell International Inc converts approximately 37¢ of every revenue dollar into gross profit (gross margin: 36.9%).After accounting for operating expenses and taxes and expenses, the company retains 12.6% as net profit margin, resulting in $4.73B in net earnings.
Period Information
Report Type: Annual (10-K)
Period: Jan 2025 to Dec 2025
Revenue composition by disclosure category for the latest period
Analyzing long-term margin stability and competitive positioning
HONEYWELL INTERNATIONAL INC’s gross and operating margins show a multi-year improvement from the low-30% gross and high-teens operating margins in 2020–2021 to a plateau in the high-30% gross and low- to mid-20% operating range in 2024–mid-2025. Gross margin reached as high as 38.1% in several quarters through 2024–2025 before easing slightly to 36.9% at year-end 2025. Operating margin rose from around the high teens in 2020–2021 to a peak of 24.1% in 2025-06-30, then declined to 22.4% in the most recent quarter.
Net profit margin has been more volatile over the period, climbing into the high teens (around 19% in parts of 2022–2024) and then moving lower through 2025; it fell from 15.1% on 2025-09-30 to 12.6% on 2025-12-31. The most recent trailing twelve-month gross margin was 36.9%, operating margin was 22.4%, and net profit margin was 12.6%.
Understanding Profit Margins
Between Jan 2025 and Dec 2025, Honeywell International Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Over the past several trailing-twelve-month periods, HONEYWELL INTERNATIONAL INC’s operating cash flow and net income generally tracked together but with operating cash flow running above net income in the most recent quarters. Operating cash flow rose to a peak of $7.49B (period ending 2025-09-30) before declining to $6.41B at 2025-12-31 and $5.16B at 2026-03-31. Net income declined from mid-2024 peaks around $7.1B to $5.71B at 2024-12-31, moved modestly in 2025, and fell to $4.73B at 2025-12-31.
Notable inflection points include the late-2024 step down in net income (from approximately 7.1B to 5.71B) and the operating cash flow spike in 2025-09-30 followed by a sharp fall into early 2026. The most recent Operating Cash Flow (TTM) was $5.16B. The most recent Net Income (TTM) was $4.73B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
HONEYWELL INTERNATIONAL INC's ROE has been elevated over the past year after a sharp trough at 10.1% on . It rebounded to the low- to mid-40% range in early-to-mid (peaking around 43.3% on and 42.4% on ), then moderated through late and .
From onward, the company posted ROEs of 30.6%, 32.6%, 35.5%, 36.5%, and 34.0% in the most recent five reported quarters, indicating a sustained, above-30% level in after the earlier volatility.
The most recent quarterly ROE was 34.0%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
HONEYWELL INTERNATIONAL INC's trailing‑12‑month operating cash flow shows a recent downward shift. Operating cash rose to a peak of $7.49B as of 2025-09-30, then moved lower to $6.41B at 2025-12-31 and further to $5.16B at 2026-03-31, down from a multi‑quarter range around $6B earlier in the series.
Investing cash flow was highly negative through late 2024 and early 2025, with TTM outflows near -$10.26B at 2025-03-31 and -$10.16B at 2024-12-31, then moderated over subsequent quarters to -$2.71B by 2025-12-31.
Financing cash flow swung from large positive activity (TTM $6.84B at 2024-12-31) to progressively lower inflows and then net outflows, moving from $1.96B at 2025-03-31 to $1.12B at 2025-06-30, then turning negative at -$859.0M on 2025-09-30 and -$1.95B on 2025-12-31, and most recently -$506.0M on 2026-03-31.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
HONEYWELL INTERNATIONAL INC’s trailing price-to-earnings multiple moved from a trough in the high-teens across 2023–mid-2024 (17.2x–17.8x) into the mid-20s through late 2024 and 2025, with visible quarter-to-quarter variability. Key recent points: 24.0x at 2024-12-31, 22.5x at 2025-03-31, 24.7x at 2025-06-30, a dip to 20.8x at 2025-09-30, and a rise to 26.5x at 2025-12-31. This sequence shows a re-rating from the low-teens to mid-20s over the past 18 months with short-term oscillations.
Earlier in the dataset there are isolated extremes (notably the 50s in 2017–2018), but recent activity is concentrated in the mid-to-high teens up through the mid-20s. The most recent Price-to-Earnings (P/E) ratio (2025-12-31) was 26.5x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.