Key Takeaways
- Honeywell Aerospace shares fell 11% after a third-quarter beat, as it held its 2026 organic sales outlook.
- One-time tariff refunds drove the quarter’s profit growth, while parts shortages held sales growth to 2%.
- The same bottleneck matters for GE Aerospace and bearing maker RBC Bearings.
- The payoff from a $19.3 billion backlog now depends on suppliers catching up in 2027.
Honeywell Aerospace (HONA) beat Wall Street’s third-quarter estimates and raised its earnings guidance after Wednesday’s close. Shares are down 11% today anyway.
The problem is supply, and it reaches past Honeywell Aerospace. GE Aerospace (GE) is buying a castings maker to ease its own shortage, and bearing makers like RBC Bearings (RBC) are selling into the same tight market.
The Beat Was Thinner Than It Looks
Adjusted EPS of $2.21 topped the $1.86 consensus.
But adjusted EBIT rose just 1%, and it included about $50 million of one-time tariff refunds. Measured against last year’s results adjusted for standalone-company costs, management put the growth at 4%, and by my math that drops to about flat without the refunds. In Engines and Power Systems, segment profit fell 16% even with price increases and refunds.
Organic sales growth guidance stays at 4%-5%, and the adjusted EBIT range keeps the same $4.4 billion midpoint. CFO Josh Jepsen said the higher EPS guide reflects “lower below-the-line expenses than previously expected as a new public company,” not a higher operating-profit outlook.
Bearings Are the Bottleneck
Demand is there: backlog grew 12% in a year to $19.3 billion, and Jepsen said growth this year would have been above 8%, not 4% to 5%, if supply had kept pace. But commercial aftermarket sales grew just 2%, and about a point of that was pulled forward from the fourth quarter. On Wednesday’s call, CEO Jim Currier called bearings “the most difficult category for us this year.”
He also gave dates. A second-source bearing supplier should clear its past-due orders by early 2027, and a third comes online in the second quarter of 2027. Longer term, Honeywell Aerospace is building a $500 million plant in Tempe, Arizona, to do more of its own complex machining, but it doesn’t open until late 2028.
Wall Street’s estimates build in faster growth, with revenue up about 8% in 2027:
TIKR Tracks 16 Analysts on Honeywell Aerospace. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Honeywell Aerospace, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Honeywell Aerospace’s Analyst Ratings
The Same Wait at GE and RBC
GE Aerospace’s LEAP engine deliveries are up 26% this year but grew just 5% in the third quarter. GE agreed to buy Consolidated Precision Products to add castings capacity. GE is buying its way past the bottleneck, while Honeywell Aerospace is counting on its suppliers to catch up in 2027, with its own Tempe plant to follow in late 2028.
RBC Bearings’ aerospace and defense sales rose 37% in its quarter to June 27, and its backlog more than doubled to $2.3 billion. Both figures include VACCO, which it acquired after the year-ago quarter.
What Honeywell Aerospace Has to Show in 2027
The stock traded at 21x forward earnings before today, its average since the June spinoff. At today’s price it’s about 18x, close to its post-spinoff low.
The drop is a fair reaction to a quarter whose profit growth came from refunds and whose EPS raise came from lower expenses. There’s a real case on the other side. Backlog is up 12%, management raised its second-half free cash flow guide to $1.2 billion to $1.4 billion, and it declared its first dividend. But until the bearing suppliers hit those 2027 dates and aftermarket sales speed up, the lower multiple isn’t enough by itself.
So What Is Honeywell Aerospace Stock Actually Worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Honeywell Aerospace could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Value Honeywell Aerospace for free
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
