Honeywell Q3 2026 Earnings Analysis

More earnings analysis: https://betafinch.com Groups: INDUSTRIALS (https://betafinch.com/groups/INDUSTRIALS) ────────── **ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex, joined as always by Jordan, and today we're digging into Honeywell's third quarter 2026 results — and this one's special because it's the first full quarter for Honeywell as a standalone, pure-play automation company following the aerospace spinoff. Before we jump in, just a quick note: This podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions. **JORDAN:** Alex, I've been waiting for this one. Honeywell basically told investors in June, "trust us, this new standalone structure is going to unlock value," and this quarter is the first real receipt. **ALEX:** And it delivered. Let's start with the headline numbers. Organic sales growth came in at 7%, which actually beat the high end of the targets management laid out at their Investor Day back in June. Adjusted EPS hit $2.27, up 34% year-over-year. And margins expanded by 370 basis points to over 21%. **JORDAN:** That 370 basis points of margin expansion is the number that jumps out at me. That's not incremental — that's a step function. And a big chunk of that came from something kind of unglamorous but really important: stranded cost elimination. **ALEX:** Right, for listeners who aren't familiar — when a company spins off a division, like Honeywell did with aerospace, there are leftover corporate costs that used to be shared across both businesses. Those are "stranded costs," and management originally gave themselves a longer runway to eliminate them. **JORDAN:** But CEO Vimal Kapur said on the call they're now on track to eliminate ALL remaining stranded costs by the end of this year — just six months after the spinoff. That's ahead of schedule, and it's a real signal of execution discipline. **ALEX:** Let's talk segments, because all three outperformed. Process Automation and Technology — they call it PA&T — grew 8% organically, with projects up a huge 14% year-over-year on LNG and petrochemical backlog conversion. Building Automation posted its eighth straight quarter of high-single-digit growth, up 8% this quarter. And Industrial Automation, which has been the laggard, grew 4% — modest, but management framed it as a genuine turnaround story. **JORDAN:** And I want to flag the data center angle, because it's becoming a real thread through this whole business. Orders in the data center vertical were up over 100% this quarter. Kapur talked about this expanding beyond just Building Automation — now Process Automation and even Industrial Automation are getting pulled into data center projects, things like liquid cooling systems and power infrastructure. **ALEX:** It's turning into what he called a "pan-Honeywell strategy" — not just one segment riding the AI infrastructure wave, but multiple pieces of the portfolio contributing. **JORDAN:** Let's talk backlog, because at nearly $19 billion, up 7% excluding divestitures, that's a serious cushion going into next year. And PA&T's backlog specifically was up double digits, driven by these massive LNG and energy project wins. Management's thesis here is that we're entering a multiyear energy upcycle — LNG buildout, refining expansion in Africa, and even early traction in low-carbon energy like sustainable aviation fuel and carbon capture. **ALEX:** The Dangote refinery example was a great anecdote from the Q&A — they're literally doubling the size of what's already the world's largest refinery, plus building another one in Kenya. That's the kind of multi-year, high-certainty project Honeywell is plugging into. **JORDAN:** Now, there was healthy skepticism in the Q&A too. A few analysts pushed on whether Q4 order guidance — high singl This episode includes AI-generated content.