Honeywell Aerospace was spun out on June 29, cut guidance 39 days later, and lost a fifth of its value — because it cannot build fast enough, not because anyone stopped buying.
Honeywell split in two on June 29. Aerospace became HONA, holders got one HONA per two HON shares, and it went straight into the S&P 500. It closed day one at $220.19. Nothing was taken from HON — the old company was worth about $131B and was simply cut in half.
Its first standalone quarter missed both lines and cut full-year organic growth to 4–5% from 7–9%. The stock fell 20% to a low of $150.16. It has since bounced to $168.51.
The cut was supply, not demand. Backlog rose 9% to a record $18.2B, book-to-bill was 1.1x, and the company booked $15B of new wins. It trades at 21.7x forward earnings, the cheapest in aerospace, against a street target of $241.54.
THIS IS NOT FINANCIAL ADVICE. Every level, scenario and opinion here is my own analysis, nothing more. I am not a financial advisor. HONA has been public for five weeks and fell 20% in a single session this month. Treat all of it as one trader's read and do your own research before you risk a dollar. NFA · DYOR.
I'm buying it.
I think this company is going to do great things. What it really owns is a certification monopoly — once a Honeywell APU or flight computer is certified onto an aircraft type, that airline legally cannot swap in someone else's part without re-certifying it. They own that plane's spares for twenty to thirty years, and nobody can take it from them.
Yes it missed. But the miss was about not being able to build fast enough, and the aeroplane industry is bottlenecked on supply until roughly 2030. That is not a demand problem. Every quarter that constraint holds is another quarter of orders stacking into a backlog that has to get delivered eventually, on aircraft that keep flying longer because airlines cannot get new ones.
I am buying the company, not the quarter.
What you actually own. Sell the printer cheap, own the ink for thirty years.
An aircraft is not built by one company. Boeing and Airbus build the airframe, GE and Rolls-Royce build the big engines, and almost everything else is bought in. HONA makes the cockpit displays, navigation and flight management computers, collision avoidance, the auxiliary power unit in the tail that runs the lights and air conditioning at the gate, the actuators that move control surfaces, and the terrain and runway warning systems.
The first sale, to the aircraft maker, is low margin. Then for the next 20 to 30 years, every airline flying that aircraft must buy HONA spares and HONA servicing, because the equipment is certified to that airframe. That second wave is where the profit lives, and it is exactly the revenue the casting shortage is choking.
HONA makes money by getting its equipment onto aircraft cheaply, then selling the replacement parts and servicing at high margin for three decades.
Three segments of similar size. Nothing like similar profitability.
| Segment | Q2 sales | Margin | What it is |
|---|---|---|---|
| Control Systems | $1,342M, +7% | 29.0% | Flight controls, actuation, thermal, safety. Best margin, EBIT +8%. |
| Electronic Solutions | $1,774M, +8% | 25.9% | Avionics, displays, navigation, radar, sensors. Biggest segment. |
| Engines & Power | $1,406M, +1% | 12.4% | APUs, small turbines, power generation. EBIT down 32%. The problem. |
| Channel | Q2 sales | Share |
|---|---|---|
| Commercial aftermarket | $2,026M, +8% | 45% — the high-margin spares business |
| Defense and space | $1,817M, +3% | 40% — governments and primes |
| Commercial new-build | $679M, +6% | 15% — Boeing, Airbus, business jets |
A twenty-year insider and an engineer.
Jim Currier, 60, has run Honeywell's aerospace segment since August 2023 and has been in the business since 2006. He previously ran Electronic Solutions and the aftermarket organisation across Europe, the Middle East, Africa and India — the two most profitable parts of what he now runs. Before Honeywell he developed upper-stage rocket engines at United Technologies, and he was inducted into the International Space Hall of Fame in 2014. Board chair is Craig Arnold, the former Eaton CEO.
Two percent of suppliers took down the whole guide.
The chokepoint is investment casting — the only way to make turbine blades, combustor liners and APU components from nickel superalloys. There is no substitute process; the internal cooling channels cannot be machined. HONA has over 3,000 suppliers and roughly 98% are performing. About 2% cause the entire problem, held back by skilled labour shortages at Tier 3 and Tier 4 level.
Qualifying a new aerospace foundry takes 18 to 36 months — sample testing, AS9100 certification, then manufacturer sign-off. Nickel-alloy lead times run 28 to 32 weeks against 4 to 6 historically. Capacity was deliberately cut in the 2020–21 downturn and never restored, and many casting suppliers are choosing not to expand after being burned. Industry analysis puts full normalisation at 2030 or later. Over 3,500 commercial engines are currently waiting on castings and forgings.
With castings scarce, HONA must send them to Boeing and Airbus, who hold contractual build schedules. Aftermarket customers can absorb a delay without breach. So the scarce input goes to the lowest-margin business and starves the highest. EBIT margin fell from 24.9% to 22.0%. The Engines segment's $82M profit decline was larger than the entire company's $71M decline.
The order book is the strongest part of this story.
| Signal | Detail |
|---|---|
| Backlog | $18.2B, up 9%. Roughly a full year of revenue already sold. |
| Book-to-bill | 1.1x. More booked than shipped. Orders up 8% on a trailing twelve-month basis. |
| IndiGo | Avionics and APUs for 810 Airbus A320neo aircraft — the largest equipment win in company history, with long-term aftermarket support attached. |
| Aeromexico | Runway safety technology across 100+ Boeing 737s. |
| FAA 5G rule | Mandated radio altimeter upgrades on 50,000–60,000 units, a $4–7B opportunity shared with RTX. |
Boeing and Airbus are constrained by the same shortage. Airlines cannot take delivery of new aircraft, so they fly older ones harder and defer retirements. Older aircraft consume more spare parts. The bottleneck hurting HONA today is actively building the aftermarket demand that pays it later.
Demand does not always wait. 74% of airlines now use PMA parts — third-party approved replacements — specifically to work around shortages, and used serviceable material is the fastest-growing aftermarket segment at 7.3% a year. Once an airline qualifies a PMA alternative the switch is usually permanent. HEICO leads that market and trades at 65x earnings for exactly this reason. The leakage is real but concentrated in simple consumables, not the certified systems where HONA's value sits.
It came out of the split carrying $15.8 billion of debt.
Spinoffs are routinely loaded with debt on the way out, and this one is no exception. HONA issued roughly $15.85B of long-term debt at separation against essentially none before. Market cap of $53.4B plus that debt puts enterprise value near $65B, or about 14.8x the midpoint of guided adjusted EBIT.
At $150, no. At $168, roughly yes.
The report cut FY26 EPS 12.5% against consensus, from $8.86 to a $7.75 midpoint. The stock fell 26.3%. If only earnings had changed and the multiple held, fair value was $178.13. So the panic overshot by roughly double.
But the market has already fixed most of it. At $168.51 HONA trades at 21.7x guided earnings against 23.0x before the print — a de-rating of only 1.3 turns. The extra haircut is not irrational: the recovery moved from 2026 to 2027 and possibly 2030, so you lost years of compounding, not just one year of earnings.
Cheapest in the group, and the smallest.
| Company | Market cap | Trailing P/E |
|---|---|---|
| GE Aerospace | $382.8B | 44.2x |
| RTX | $299.1B | 39.3x |
| Rolls-Royce | ~$175B | 43.4x |
| Howmet (the caster) | $112.4B | 60.8x |
| TransDigm | $67.7B | 38.3x |
| HONA | $53.4B | 21.7x forward |
| HEICO | $50.6B | 64.7x |
Howmet is worth $112.4B on $9.1B of revenue. HONA is worth $53.4B on $17.9B. The casting supplier is valued at more than double its customer on half the sales. Persistent scarcity is unambiguously good for whoever owns the casting capacity and ambiguous for whoever has to buy it. HONA is a buyer.
Where they sit, and why customers cannot leave.
| Layer | Who |
|---|---|
| Upstream | Nickel and titanium producers, superalloy mills, then casting houses — Howmet, Precision Castparts (Berkshire-owned), Doncasters, Chromalloy |
| HONA | Tier 1 supplier, one level below the aircraft makers |
| Downstream | Boeing, Airbus, Gulfstream, Bombardier, defense primes, then the airlines and militaries operating the fleet |
| Direct rivals | RTX Collins Aerospace, Safran, Thales, Garmin, GE in overlapping categories |
| Aftermarket rivals | HEICO and AAR via PMA parts — the quiet threat |
Once a HONA component is certified onto an aircraft type, the airline cannot legally substitute a competitor's part without costly re-certification, so HONA owns that aircraft's spares for its entire 20 to 30 year life.
Four things that settle this.
My levels on the chart.
Want the entries, stops, and sizing?
Join the Discord to find out! →Honeywell Aerospace Q2 2026 earnings release and segment tables (Aug 5, 2026) including backlog, segment sales and adjusted EBIT, end-market splits and long-term debt · Q2 2026 earnings call · spin-off completion release (June 29, 2026) · Reuters, WSJ, MarketWatch, Invezz and Tech Times coverage of the Aug 5–6 guidance cut and casting constraint · analyst revisions via TheFly (RBC, UBS, Evercore, Morgan Stanley, Wolfe) · Jim Currier biography via Honeywell press release (Nov 2025) · company lineage via Britannica and Garrett AiResearch histories · PMA and USM market data via Aviation Maintenance Magazine, Fortune Business Insights and Dataintelo · casting lead times and normalisation timeline via Astral Air Parts 2026–27 outlook and BCG · prices, market caps, share counts and multiples for HONA, HON, GE, RTX, TDG, HEI, HWM and Rolls-Royce via stockanalysis.com, Aug 7, 2026. Compiled Aug 7, 2026.