To The Moon

$Honeywell(HON)$ delivered its first earnings report as a stand-alone automation company following the separation of Honeywell’s aerospace operations. The stock rose 5.7%, suggesting investors welcomed the clearer business profile and higher annual guidance despite an earnings miss.

Second-quarter sales increased 4% to $9.72 billion, above the approximately $9.51 billion expected by analysts. Adjusted earnings rose 10% to $4.52 per share but missed the $4.81 consensus estimate. Management increased its 2026 adjusted earnings outlook to $8.05–$8.35 per share and projected annual sales of $19.8 billion–$20.0 billion. Reuters’ July 23 report summarises the post-separation results.

Building Automation was the strongest division, with organic sales increasing 9% and orders rising 13%. Demand from data centres, hospitals and hotels supports the bullish case because these facilities require increasingly sophisticated systems for energy management, security and climate control.

Industrial Automation sales increased 4%, while orders rose 10%. Process Automation and Technology was weaker, with sales declining 1%, although orders jumped 24%. Management expects that order strength to produce a sharper revenue improvement beginning in the third quarter.

The separation makes the investment thesis clearer. Investors can now evaluate automation growth and margins without the much larger aerospace operation dominating the results. A more focused management team may also allocate capital more efficiently.

However, the company must prove that the improved order book converts into profitable revenue. Automation demand remains tied to industrial investment, commercial construction and customers’ capital budgets. The adjusted earnings miss also shows that stronger sales are not automatically producing the expected bottom-line performance.

HON Weekly Chart

Honeywell closed at $246.27 after reaching $250.20. $Honeywell(HON)$’s weekly chart is constructive but still range-bound, with price rebounding sharply from the $215–$218 support zone and now approaching the upper resistance band at $250.50–$257.50.

The recent bullish candle shows strong buying interest, but the stock is not yet in a confirmed breakout, so chasing calls before resistance is cleared could leave the trade vulnerable to another rejection back toward the mid-$230s. The cleaner setup would be to wait for a decisive weekly close above $257.50, ideally followed by a successful retest, and then consider a 60–90 DTE $250/$270 call debit spread to capture a potential continuation toward the high-$260s or low-$270s while limiting premium risk. Traders who prefer selling premium could instead wait for a pullback that holds above roughly $235–$240 and use a defined-risk $225/$215 bull put spread, with the bullish thesis materially weakened if HON closes below the $215 support area.

The evidence leans moderately bullish. Rising orders, stronger guidance and clearer post-separation reporting improve the outlook. The thesis would be invalidated if the 24% increase in Process Automation orders fails to convert into revenue, margins deteriorate or industrial demand weakens enough to reduce the backlog. This is personal opinion for education and is not financial advice.

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Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, or trading advice. The views expressed are personal opinions based on publicly available information and are subject to change without notice. Investors should conduct their own research and consider their financial situation, risk tolerance, and investment objectives before making any investment decisions. I do not guarantee the accuracy or completeness of the information presented.