Honeywell International (HON 0.72%) has exposure to a lot of high-growth areas, but you wouldn't know it from the share price. The company today trades at 24 times earnings, about the same valuation as 2020 and 30% below the company's multiple in 2021. The stock has been largely flat during that time.

Management is aware of the disconnect, and has big plans to address it.

What's wrong at Honeywell?

Honeywell is a conglomerate focused on manufacturing highly engineered components for high-growth industrial end markets. But the business has been stuck in neutral. In February, Honeywell guided for first-quarter and full-year earnings significantly below Wall Street expectations.

Critics, including activist Elliott Management, have concluded Honeywell suffers from a so-called "conglomerate discount." The fear is that with Honeywell's different businesses obscured under one holding company, investors don't appreciate the strengths of each individual unit. That, in turn, causes the market to undervalue the stock.

Honeywell's plan to fix its flailing stock price

In February, Honeywell said it would split into three independent companies focused on advanced materials, automation, and aerospace.

As independents, the hope is the units will not have to compete for capital and other resources. And each business will be free to pursue mergers and pay dividends based on the norms of their industries.

"The distinct investment profile of each company and an improved ability to customize capital allocation strategy will unleash the full potential of each company's strong balance sheet, creating the best path forward for an enhanced commercial success, faster-paced technological innovation, and increased customer intimacy," CEO Vimal M. Kapur told investors.

It's worth noting that Honeywell has tried this before, with uninspiring results. The 2018 spinoffs of Resideo Technologies and Garrett Motion have underperformed, along with Honeywell.

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There's a key difference between then and now: Back in 2018, Honeywell shed underperforming units to focus on growth-focused businesses. If the planned breakup clears the fog around Honeywell and allows investors to focus on the strength of the individual businesses, today's buyers could be rewarded in the years to come.