Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on Honeywell International Inc. (HON) on Business Model Mastery’s Substack. In this article, we will summarize the bulls’ thesis on HON. Honeywell International Inc. (HON)'s share was trading at $227.13 as of 9th June. HON’s trailing and forward P/E were 26.11 and 22.22 respectively according to Yahoo Finance.
Aerial shot of a bustling financial district, with imposing corporate buildings in the background.
Honeywell represents one of the most deeply embedded and defensible industrial franchises in the global economy. Its business spans critical sectors like aviation, energy, buildings, and defense, but its strength lies in the quiet interconnection of its segments. In aviation, nearly half of the segment revenue, over $6.2 billion, is recurring, driven by aftermarket services such as predictive maintenance and avionics support, riding the global tailwind of increased flight hours.
The UOP division, which licenses refining and chemical technologies, generates high-margin cash flows and long-term customer lock-in across thousands of global industrial sites. Honeywell Forge, the company’s industrial cloud platform, overlays data intelligence on top of its hardware, offering sticky software solutions with 60 %+ margins that manage everything from aircraft maintenance to smart grid optimization. These embedded systems create a form of economic gravity—clients aren’t bound by contracts, but by operational necessity.
Geographically, Honeywell’s 42% non-U.S. revenue and $3.44 billion in U.S. government contracts showcase both diversification and stability. Its scale, presence in 79 countries, and proprietary “Honeywell Accelerator” performance system institutionalize excellence across 22,000+ internal tools, enhancing operational resilience.
Competitive moats stem from product complexity, regulatory barriers, high switching costs, and vertically integrated offerings that span hardware, software, services, and materials. Even in challenged areas, such as warehouse automation, Honeywell improves margins through discipline. A $31.8 billion backlog further secures future earnings.
Strategic acquisitions in 2023 reinforced cybersecurity, energy efficiency, and smart buildings. With a layered model built on systems, not headlines, Honeywell compounds quietly, by being indispensable infrastructure, not a fleeting trend.
Previously, we highlighted a bullish thesis on Schlumberger from Business Model Mastery, which positioned the company as a digital-first oilfield services leader. With high-margin international growth, vertically integrated offerings, proprietary data, and strong client lock-in, SLB is viewed as a durable compounder amid energy's digital transformation. The stock price has appreciated by approximately 2% since the recent coverage.
