An unwarranted post-earnings decline in Honeywell shares on Thursday presented a buying opportunity for new investors ahead of the conglomerate’s breakup into three publicly traded companies. Revenue in the second quarter ended June 30 rose 8.1% year over year to $10.35 billion, topping expectations of $10.07 billion, according to market data service LSEG. Organic sales advanced 5% versus the year-ago period, more than double the 2.4% increase the Street was looking for, according to FactSet. Adjusted earnings per share (EPS) rose 10.4% from last year to $2.75, exceeding estimates of $2.66, LSEG data showed. Bottom line As Jeff Marks put it during Thursday’s Morning Meeting, the 5% drop in Honeywell stock in the face of these results was nothing short of “disrespectful.” Q2 was a strong showing from Honeywell as revenue, organic sales growth, and adjusted EPS not only outpaced Wall Street estimates but the company’s expectations as well. Management also raised its full-year outlook for all three of these metrics. We’re reiterating our buy-equivalent 1 rating and $255-per-share price target. HON YTD mountain Honeywell YTD It wasn’t all perfect. Segment margin was disappointing both for the quarter and in the company’s forward guidance. That was partly due to an increase in research and development (R & D) costs, including about $200 million in the aerospace division. While we don’t like to see profit metrics miss the mark, we think it’s more important that management continues to push ahead with growth investments. Committing to R & D, even ahead of Honeywell’s aerospace, automation, and advanced materials split, will help foster post-separation success. Speaking of separation, we know Honeywell’s advanced materials business will be spun off first. On the call, management updated the targeted timeframe for completion, narrowing it to the fourth quarter. The aerospace separation will be next, with the team continuing to target the back half of 2026. The remaining businesses will become a pure-play automation company. “We are not waiting for the separation to reshape our portfolio for future growth. We continue to selectively deploy capital towards acquisitions, announcing two new deals in the past couple of months,” Honeywell CEO Vimal Kapur said, adding the team is also still looking at alternative options for businesses that don’t fit into the company’s future vision. Kapur will be a guest on “Mad Money with Jim Cramer” on Thursday evening. Quarterly commentary Second-quarter sales in Honeywell’s aerospace technologies segment, the company’s largest and most crucial unit, missed estimates but still grew 10.7% to $4.31 billion. On the call, management said aerospace was negatively impacted by destocking efforts at one of its original equipment manufacturing (OEM) customers. Destocking refers to when a customer is trying to sell excess inventory and slows or pauses orders from its supplier. The team believes that this issue will be a transitory headwind that should abate in the back half of the year. An aerospace margin decline of 175 basis points, or 1.75 percentage points, was mostly due to the ongoing CAES Systems integration. Management, however, expects margins to improve in the back half of 2025 and start to normalize next year. Management also highlighted that CAES has thus far been growing revenue at a high double-digit rate, which has been ahead of their expectations. Given the headwinds impacting the aerospace segment do indeed appear to be transitory, it’s our view that anyone selling Honeywell shares on the miss is being shortsighted. Industrial automation sales dropped 5% to $2.38 billion, but still managed to outpace expectations. The segment saw growth in process solutions, as well as sensing and safety. However, weakness did continue in warehouse and workflow solutions, as well as productivity solutions. Earlier this month, the company said it was evaluating strategic alternatives for those two lagging businesses. Building automation sales and energy and sustainability solutions sales were both up year over year and beat expectations. Sales of advanced materials — the planned spinoff, which falls under the latter unit — were up year over year. Why we own it Honeywell is a provider of industrial technology to firms in various industries. The company’s planned three-part breakup should be a value-creating event for shareholders. Competitors: Emerson Electric , RTX , 3M Weight in portfolio: 1.84% Most recent buy: March 5, 2025 Initiated: July 5, 2020 Guidance As for full-year guidance, as we mentioned above, management raised its outlook for sales, organic growth, and adjusted earnings per share. Operating and free cash flow projections were left unchanged. The segment margin outlook, however, was revised lower. Here’s where Honeywell’s full-year guidance now stands on some key metrics. Sales in a range of $40.8 billion to $41.3 billion (up from a prior range of $39.6 billion to $40.5 billion). That’s a beat versus the $40.37 billion consensus estimate, according to LSEG Organic sales growth between 4% and 5% (up from a prior range of 2% to 5%), which is a beat versus the 3.7% organic growth expected, according to FactSet. Adjusted earnings per share between $10.45 and $10.65 per share (up from $10.20 to $10.50 previously). That’s better than the $10.42 per share expected, according to LSEG. Segment margin between 23% and 23.2% (down from 23.2% to 23.5% previously), which is below the 23.4% rate the Street was looking for, according to FactSet. For the ongoing third quarter, Honeywell’s guidance was ahead of expectations for sales, organic growth, and adjusted EPS. However, as with the full-year outlook, segment margin in the range of 22.7% to 23.1% was below the 23.6% consensus on FactSet. (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.