Honeywell (NASDAQ:HON) just pulled a major move, announcing plans to split into three independent companiesa shift aimed at unlocking shareholder value but met with a mixed market reaction. Shares initially jumped in premarket trading before reversing course after the company's earnings guidance fell short, declining by 5.35% at 12.44pm today. The aerospace and automation businesses will be spun off, joining the already planned separation of its advanced-materials unit, with the full restructuring expected to wrap up by late 2026. CEO Vimal Kapur pitched it as a strategic win, but investors weren't fully sold. Honeywell reported solid fourth-quarter numbers, with revenue up 7% to $10.1 billion, but 2025 EPS guidance of $10.10 to $10.50 came in below expectations, raising some eyebrows.

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Even with macro headwinds, Honeywell's backlog hit a record $35.3 billion, signaling strong demand, particularly in aerospace and building solutions. However, the Bombardier deal put pressure on margins, with segment profits slipping 8%. Industrial automation was stagnant, while building automation surged 8% organically, showcasing the company's uneven growth story. The move to break up the business mirrors General Electric's playbookGE's split into three separate firms has been a market hit, with all new entities trading above pre-split levels. Investors are now wondering: will Honeywell follow suit, or will this be a bumpy road?

Leadership remains bullish, pushing the narrative that the restructuring will streamline operations and drive long-term growth. Full-year adjusted EPS of $9.89 marked a 4% year-over-year increase, but the weak outlook and execution risks have some investors skeptical. Aerospace, despite strong demand, saw segment margins contracta potential red flag as Honeywell navigates this transition. With activist investor Elliott Management pushing for change, and investors looking for proof that this move creates real value, all eyes are now on Honeywell to see if it can pull off the playbook successfully.