Honeywell Aerospace Q2 Earnings Miss Estimates, Sales Increase Y/Y

Sales rose 5% year over year to $4.52 billion but missed the consensus estimate of $4.67 billion by 3.1%. Supply constraints limited deliveries across end markets, while backlog increased 9% to $18.15 billion.

Commercial Aftermarket sales increased 8% to $2.03 billion, supported by broad-based demand across the installed base and higher business aviation flight hours. 

Commercial Original Equipment sales rose 6% to $679 million as commercial air transport shipments recoupled with higher customer build schedules. Defense and Space revenues advanced 3% to $1.82 billion, as stronger domestic volumes were partly offset by supply-constrained international deliveries and the wind-down of a restricted government program.

Honeywell Aerospace's Segment Results Stay Mixed

Electronic Solutions sales grew 8% to $1.77 billion, led by Defense and Space and Commercial Aftermarket demand. Segment adjusted EBIT declined 3% to $459 million as higher volume and pricing were more than offset by unfavorable mix and higher costs.

Engines & Power Systems sales increased 1% to $1.41 billion, but segment adjusted EBIT dropped 32% to $174 million. Control Systems sales rose 7% to $1.34 billion, while segment adjusted EBIT improved 8% to $389 million as pricing more than offset higher costs.

HONA's Profitability Faces Mix and Cost Pressure

Adjusted EBIT declined 7% to $995 million from $1.07 billion. The adjusted EBIT margin contracted to 22% from 24.9%, reflecting unfavorable sales mix, higher costs and roughly $50 million of inventory obsolescence charges.

The company allocated more output to domestic defense customers and Engines & Power Systems original equipment programs, which carry lower profitability. Reported net income fell 70% to $256 million, while GAAP earnings decreased to 78 cents per share from $2.66.

HONA’s Financial Position

Cash and cash equivalents amounted to $1.06 billion as of June 27, 2026, up from $213 million as of 2025-end. Long-term debt increased to $15.85 billion from $4 million, reflecting financing transactions related to the separation from Honeywell Technologies.

Net cash provided by operating activities totaled $571 million in the quarter, down from $748 million a year earlier.

HONA’s 2026 Outlook

Management lowered its 2026 organic sales growth outlook to 4-5% from 7-9%. 

Pro forma standalone adjusted EBIT is now projected to be between $4.35 billion and $4.45 billion, down from the prior guidance of $4.65 billion to $4.75 billion. 

The company initiated pro forma standalone adjusted earnings guidance of $7.60-$7.90 per share and maintained second-half free cash flow guidance of $1-$1.5 billion. The Zacks Consensus Estimate is pinned at $8.44 per share, which is higher than the company’s newly guided range.

HONA’s Zacks Rank

The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases 

Teledyne Technologies Inc. TDY reported second-quarter 2026 adjusted earnings of $6.28 per share, which surpassed the Zacks Consensus Estimate of $5.78 by 8.7%. The bottom line also improved 20.8% from $5.20 recorded in the year-ago quarter.

TDY’s total sales were $1.66 billion, which beat the Zacks Consensus Estimate of $1.57 billion by 5.9%. The top line also jumped 9.8% from $1.51 billion reported in the year-ago quarter. 

Hexcel Corporation HXL reported second-quarter 2026 adjusted earnings of 66 cents per share, which improved 32% from the year-ago quarter’s figure of 50 cents. The bottom line also surpassed the Zacks Consensus Estimate of 56 cents by 17.9%.

The company’s net sales were $529.3 million, which beat the Zacks Consensus Estimate of $522 million by 1.5%. The top line also witnessed an improvement of 8% from the year-ago quarter’s figure of $489.9 million.

Textron Inc. TXT reported second-quarter 2026 adjusted earnings of $1.62 per share, which surpassed the Zacks Consensus Estimate of $1.52 by 6.6%. The bottom line also rose 4.5% from $1.55 in the year-ago quarter. 

The company reported total revenues of $3.83 billion, which beat the Zacks Consensus Estimate of $3.82 billion by 0.15%. The top line also increased 3% from the year-ago quarter’s level of $3.72 billion.

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