Honeywell Aerospace (HONA -23.16%) stock plunged 20.8% through 9:50 a.m. ET in early trading on the Nasdaq Thursday, after missing on its first earnings report since spinning off from parent company Honeywell (HON -2.97%) in June.
The supplier of airplane navigation systems, engines, and power systems was expected to report earnings of $2.13 per share in pro forma Q2 2026 results, but could only muster up $1.87. Revenue for the quarter was $4.5 billion.
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Honeywell Aerospace's first independent earnings report
Honeywell grew its sales 5%, relative to what it would have collected had it been a stand-alone company one year ago. Earnings for the quarter -- on the same metric -- declined 32% pro forma, while earnings calculated under generally accepted accounting principles (GAAP) tumbled 71%.
The official GAAP profit per diluted share was only $0.78.
NASDAQ: HON
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What's next for Honeywell stock?
So that's where things stand today. What about the future?
"Secular trends across our end markets remain strong," and Honeywell Aerospace is seeing "significant customer demand," says CEO Jim Currier, albeit "supply constraints" are limiting sales growth for the time being. So even with backlog growing a stronger-than-sales-growth 9% in the quarter, Honeywell Aerospace is adopting a conservative stance in its guidance.
It's lowering expectations, and telling investors to expect no more than 5% sales growth in the second half of this year, with H2 earnings of perhaps $7.75 per share and H2 free cash flow between $1 billion and $1.5 billion.
Annualized, that makes for perhaps a 10 P/E stock -- but trading for closer to 20 times annual FCF, which I admit gives me pause. For the time being, I'm calling Honeywell Aerospace a "wait and see" stock. I'd hold it, but I wouldn't rush out and buy it just yet.
