Honeywell shares were on track for a record-high close Tuesday after the industrial conglomerate said it is re-evaluating what to do with two lagging businesses ahead of its planned three-way split. The news Honeywell announced Tuesday it is exploring strategic alternatives for its productivity solutions and services (PSS) unit and its warehouse and workflow solutions (WSS) segment. Getting rid of these businesses would streamline the company’s automation portfolio. Automation will be one of the three publicly traded companies that result from Honeywell’s upcoming breakup. Aerospace and advanced materials will be the other two. Both of these businesses — which serve the transportation and logistics industries — brought in roughly $2 billion in combined revenue in 2024. Jefferies estimates their combined value at $3.8 billion. Honeywell said that any transactions involving PSS and WSS, which are not guaranteed, would not change the separation timelines of the “end of 2025 or early 2026” for advanced materials and “second half of 2026” for aerospace. At session highs on Tuesday, Club stock Honeywell ticked above its July 3 record close of $240.40 per share following the strategic alternatives news. Honeywell also said Jim Masso, an industry veteran with 20 years of experience, was appointed as CEO of the Automation business, effective next week. HON YTD mountain Honeywell International (HON) year-to-date performance Big picture Honeywell’s decision last year to break up follows several quarters of lackluster organic revenue growth, along with a push from activist investor Elliott Investment Management. The hedge fund initiated a more than $5 billion position in November 2024. In its letter to Honeywell, Elliott said, “Operational issues have been more pronounced” in three of its business units, including the aforementioned productivity solutions and services unit and its warehouse and workflow solutions segment. Elliott also called out Honeywell’s personal protective equipment (PPE) business, which was sold in May. Each of these units has declined at double-digit percentage rates since 2021, according to Elliott. Bottom line Over the past year, Honeywell has continued to reshape its portfolio in order to focus on higher-growth businesses. Tuesday’s news is just another example of the kind of effort we love to see from management following many lackluster quarters. If Honeywell were to sell the struggling PSS and WSS units, the company could acquire other lucrative businesses. “Not only would the simplification be better for Honeywell, but they can use some cash proceeds to make some more accretive deals,” said Jeff Marks, the Investing Club’s director of portfolio analysis. Since June 2023, Honeywell said it has announced $14 billion of acquisitions, including Compressor Controls Corporation, the LNG business from Air Products , the Access Solutions security business from Carrier Global, pumps and gas compressors maker Sundyne, and several others. “They’ve been making a ton of those [deals] lately,” Marks said during Tuesday’s Morning Meeting. “It adds firepower there.” Honeywell reports earnings on July 24 — and any updates on the future of PSS and WSS, as well as the overall three-way breakup of the company, would be welcome. Honeywell looks to be set up for a quarterly beat and guidance raise after management set expectations sensibly last time around, aiming to under-promise and over-deliver. We have a buy-equivalent 1 rating on Honeywell stock. (Jim Cramer’s Charitable Trust is long HON. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Honeywell gives shareholders another reason to like the stock ahead of its breakup
by Stacks Grow
written by Stacks Grow
Stacks Grow
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