Honeywell Aerospace Raises EPS Outlook to $8 as Sales Grow 2%
Key Facts
Honeywell Aerospace reported sales of $4.644 billion in the third quarter of 2026, up 2% year over year, and raised its full-year adjusted earnings-per-share outlook to a range of $7.85–$8.00. Net income was $737 million, compared with $654 million in the same period a year earlier, while adjusted operating profit rose to $1.161 billion from $1.151 billion. The company announced the results on October 28, alongside an update to its annual outlook. It kept expected organic sales growth for 2026 at 4%–5%, pairing improved earnings and cash flow estimates with an unchanged sales forecast. It also announced its first quarterly cash dividend since separating from its parent company.
The company raised its standalone adjusted earnings-per-share outlook from $7.60–$7.90 to $7.85–$8.00 and narrowed its full-year adjusted operating profit range to $4.375–$4.425 billion, from a previous range of $4.35–$4.45 billion. Its organic sales growth forecast remained at 4%–5%. Honeywell also revised its second-half free cash flow outlook to $1.2–$1.4 billion, from a previous range of $1.0–$1.5 billion. This follows the company’s August reduction of its 2026 organic sales growth forecast from 7%–9% to 4%–5%, and its adjusted operating profit forecast from $4.65–$4.75 billion to $4.35–$4.45 billion. The new update therefore raises both ends of the operating profit outlook compared with the August estimate, while holding steady the organic growth forecast cut at that time.
The backlog stood at $19.324 billion at the end of the third quarter, up 12% from $17.255 billion a year earlier. Orders rose 9% in the twelve months ended with the quarter, led by the defense and space segment. In a September update, the company said about 2% of its suppliers were classified as critical or constrained, and that ten suppliers were limiting production growth. In August, it said it was working to qualify more than 50 new suppliers and expected to qualify an additional 50 during the second half, while increasing spending on supplier tooling 20% compared with the first half. It also said it aims to expand the number of parts with multiple sources by more than 15% during 2026. In September, it cited more than $1 billion invested in its supply chain between 2023 and 2025, and an increase of more than $50 million in strategic investments during 2026 to support supplier tooling, multiple sourcing and in-house manufacturing.
The two main segments reported divergent profit performance. Electronic Solutions sales rose 4% on a reported basis and 5% organically, while adjusted operating profit increased 11%; the company said tariff refunds and pricing outweighed the effects of an unfavorable sales mix and higher costs. In Engines and Power Systems, sales increased 3% on a reported basis and 2% organically, but adjusted operating profit fell 16%, as the effects of sales mix and higher costs outweighed pricing and tariff refunds. At the company level, adjusted operating profit included a net benefit of about $50 million from refunds under the International Emergency Economic Powers Act, alongside new costs associated with operating as an independent publicly listed company. Honeywell Aerospace completed its separation from Honeywell International on June 29, 2026. In the second quarter, sales were $4.522 billion, up 5%, while adjusted operating profit fell 7% to $995 million, affected by about $100 million in separation costs and inventory obsolescence.
Contracts announced in the company’s second-quarter update provide one indication of its order base: the estimated lifetime value of new contracts since the start of the year through that update was $15 billion. They included IndiGo’s selection of Honeywell avionics and power systems for aircraft in an order covering 810 Airbus A320neo family planes. In a September update, the company said it expected sales and production growth to accelerate in 2027 and beyond, while constrained suppliers continued to limit the pace of production increases. The board approved its first quarterly cash dividend of $0.40 per share, payable on December 4, 2026, to shareholders of record at the close of business on November 13. The company’s shares, listed under the ticker HONA, closed at $165.32 on October 28, compared with $167.90 in the previous session. The investor call on third-quarter results and the 2026 outlook was scheduled for 5 p.m. Eastern time on October 28, with a replay available for 30 days.