Honeywell International is trying to pull a GE, breaking up into three companies to try to unlock shareholder value.

Honeywell, the industrial conglomerate, also reported fourth-quarter numbers on Thursday. The earnings were solid. Guidance, however, was below Wall Street estimates.

Investors undoubtedly will pay attention to the 2025 outlook, but more importantly the portfolio actions the company announced.

Honeywell laid out plans to break apart into three companies: One dedicated to automation, one to aerospace, and another to advanced materials.

Automation is the largest business, with about $18 billion in annual sales. Aerospace revenues is in the range of $15 billion. Advanced Materials is the smallest business, with about $4 billion in annual sales.

The breakup idea appears to be inspired by activist fund Elliott Investment Management, which suggested the idea in November. Elliott might have drawn inspiration from General Electric. CEO Larry Culp's plan to split GE into three companies: GE Aerospace, GE Vernova, and GE HealthCare Technologies, arguably created hundreds of billions in shareholder value.

One way breakups generate value is simply by valuation multiple arbitrage. Honeywell stock trades for about 21.5 times 2025 EPS guidance. Many more focused peers trade for higher multiples. GE Aerospace stock trades for about 38 times. Rockwell Automation, another automation player, trades for about 28 times.

DuPont, another advanced materials company, trades for about 18 times. Its low multiple is one reason it plans to spin off its electronics business in late 2025.

"The formation of three independent, industry-leading companies builds on the powerful foundation we have created, positioning each to pursue tailored growth strategies," said Honeywell CEO Vimal Kapur in a press release. "We will continue to shape our portfolio to create further shareholder value. We have a rich pipeline of strategic bolt-on acquisition targets, and we plan to continue deploying capital to further enhance each business."

The second part of his statement shows that Kapur is aware of " deal limbo" risk -- the risk that Honeywell stock gets stuck while investors wait for the spins to approach.

The advanced materials spin is slated to wrap up in late 2025 or early 2026. The separation of the remaining automation and aerospace business should be done by the second half of 2026.

It's a big undertaking. Kapur is betting it will be best for investors in the long run.

Meanwhile, for the fourth quarter, Honeywell announced adjusted earnings per share of $2.47 from sales of $10.1 billion. Wall Street was looking for per-share earnings of $2.32 and sales of $9.8 billion, according to FactSet.

Management expects 2025 earnings to land between $10.10 and $10.50 a share. The midpoint of $10.30 is below analysts' current projection of $10.92. The midpoint of sales guidance is $40.1 billion, below analysts' current projection of $41.3 billion.

The guidance looked light. That might divert some of the attention away from Honeywell's transformation plan.

Coming into Thursday, Honeywell stock has gained about 15% over the past 12 months. The S&P 500 and Dow Jones Industrial Average have risen about 23% and 17%, respectively.