Honeywell International Share Price Plunges Amid Aerospace Spin-Off Woes

Honeywell International (HON) has drawn fresh scrutiny after its former aerospace business reported weaker-than-expected first standalone earnings and cut its sales growth outlook. This comes at a time when HON's share price has fallen about 38.6% year-to-date, despite the company's one-year total shareholder return being 15%. The separation of the aerospace business has left investors reassessing their valuation of HON.

According to the most-followed narrative on HON, the fair value is $320.19, which sits well above the last close at $240.74. This gap reflects a view that the separated automation, building, and energy businesses justify a higher valuation than the current market price suggests. However, Simply Wall St's DCF model points to overvaluation instead, suggesting a fair value of $159.44.

The aerospace spin-off has come with significant costs, including a decline in annual revenue and net income for HON. The recent share price fall could limit how quickly any re-rating narrative gains traction. Despite this, HON's automation business is seen as a compounder with a strong backlog and growth prospects.