Key Points
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Following a final spinoff on June 29, investors can now select among four components of the former Honeywell.
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As the components experience price discovery, some of these spinoff stocks could surge, while others could sink.
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One of the four Honeywell spinoff stocks technically gives you exposure to two of the four separated businesses.
- 10 stocks we like better than Honeywell Technologies ›
You may know Honeywell as one of the world’s largest industrial conglomerates, but following last week’s spinoff transaction, that is no longer the case. Following the spinoff of Honeywell Aerospace (NASDAQ: HONA) as a separate, publicly traded company, Honeywell Inc. is now Honeywell Technologies (NASDAQ: HON), an industrial automation pure play.
Furthermore, the latest corporate divestiture is the culmination of other spinoff activities the company has undertaken over the past 12 months. As you may recall, last October, Honeywell spun off Solstice Advanced Materials (NASDAQ: SOLS), a specialty chemicals and materials company with exposure to fast-growing industries like data center cooling solutions and semiconductor materials.
Also, last month, prior to the aerospace spinoff, Honeywell took its quantum computing business, Quantinuum (NASDAQ: QNT), public, with Honeywell Technologies maintaining a large stake.
Among these four public entities, which one presents the greatest opportunity for investors right now? Let’s take a look at each one and determine which, if any, is worthy of a buy right now.
Tread carefully with Honeywell Technologies
On one hand, owning Honeywell Technologies means owning the most stable of the former industrial conglomerate’s disparate businesses. Long the core of Honeywell’s overall business, the industrial automation segment presents the opportunity for steady profitability and growth. A look at its financials confirms this view.
Based on pro forma financials released after last week’s spinoff, Honeywell Technologies experienced 3.5% revenue growth and 7% earnings per share (EPS) growth, respectively, during 2025. Better yet, as Honeywell Technologies and Honeywell Aerospace continue with margin expansion efforts initiated prior to the spinoff, management has guided for the potential for Honeywell’s core to experience double-digit earnings growth.
Still, with Honeywell Automation trading for 28 times forward earnings after the spinoff , it’s easy to see why shares have pulled back. You may want to wait for further weakness before entering a long-term position at a more favorable valuation. That said, given the company’s indirect exposure to the quantum computing venture Quantinuum, keep the value of this position in mind when determining whether Honeywell Technologies is undervalued or overvalued.
The same goes for Honeywell Aerospace
Right out of the gate, Honeywell Aerospace has become a hot stock. Aerospace stocks have, in general, been running hot lately, so it’s not all that surprising that investors have bid up this spinoff stock on the heels of the divestiture. The question now is whether this supplier of civilian and defense aerospace components and products represents a good value at current prices.
Unfortunately, just like its former parent’s, its shares appear pricey. They’re trading for around 27 times forward earnings, so once again, the market has factored in growth resurgence potential. That said, Honeywell Aerospace technically remains cheap compared to its richly valued peers like GE Aerospace, which trades for nearly 50 times forward earnings, and Boeing, which trades for over 90 times forward earnings.
However, Boeing’s seemingly rich valuation largely reflects a big anticipated rebound in earnings. With GE Aerospace, analysts expect the company to report nearly 15% earnings growth next year. For Honeywell Aerospace shares to experience further multiple expansion, say to a valuation well north of 30 times forward earnings, the company may have to really knock it out of the park to inspire a bullish response among investors.
Conversely, as expectations run high for a double-digit growth resurgence, any hiccup could lead to significant near-term losses. Hence, as with Honeywell Automation, tread carefully here.
Is Solstice the dark horse contender?
Honeywell Automation and Honeywell Aerospace may be garnering greater attention following the spinoff news, but if you’re wondering which Honeywell stock to buy, Solstice Advanced Materials could be the dark horse contender. This comes even as its shares have surged nearly 66% since the spinoff from the former Honeywell nine months ago.
Solstice’s strong stock market performance isn’t surprising. Not only does this stock offer exposure to industries adjacent to the artificial intelligence (AI) megatrend, like data center cooling solutions and semiconductor materials, but Solstice also manufactures uranium hexafluoride, an essential material used in nuclear power plants. This makes it a nuclear energy stock as much as its AI-related tailwinds make it an AI stock.
That said, Solstice shares have stalled in recent months, pulling back slightly from the all-time highs following its latest earnings. The fact that Solstice did not raise guidance after last reporting earnings may have something to do with it. Still, in the quarters ahead, if AI- and nuclear-energy-related tailwinds lead to further strong growth, sentiment could swing back to bullish.
With shares trading for just 30 times forward earnings, against forecasted earnings growth exceeding 20%, renewed bullishness could drive a major rerating. Among the Honeywell spinoff stocks, Solstice appears the best positioned to outperform.
The best approach with moonshot Quantinuum
As mentioned earlier, Quantinuum technically isn’t a Honeywell spinoff. Instead of spinning it off and distributing the newly issued stock to shareholders, Honeywell took its quantum computing venture public, raising nearly $1.7 billion. Following the IPO, Honeywell Automation owns around 48.1% of the company’s outstanding shares.
Quantinuum has rallied by over 24% since its public market debut. Given Quantinuum’s $19.5 billion market cap, Honeywell Automation’s stake is worth around $9.4 billion. Not too shabby, considering Honeywell Automation’s current market value is around $73 billion. As with other quantum computing stocks, this one’s valuation remains largely based on future potential. Quantinuum has yet to generate material revenue, with sell-side analysts estimating heavy losses in the foreseeable future.
Instead of owning Quantinuum directly, investors bullish on its prospects may want to own Honeywell Automation instead. Again, Honeywell Automation could decide to start paring down its position, providing billions in fresh capital for growth and/or stock buybacks. At the same time, even if Quantinuum suffers a major pullback, that may have just a muted impact on Honeywell Automation’s stock performance, given how most of its value comes from its automation business.
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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing, GE Aerospace, and Honeywell Technologies. The Motley Fool has a disclosure policy.
