The Bear Case for Honeywell International (HON)
The data-grounded bear case for Honeywell International Inc.: where its cash, enterprise, and sales multiples sit against their own five-year history, as of August 7, 2026.
By TGMCharts Research · Data as of · Updated
Honeywell International Inc. screened on an high-multiple, slowing-growth divergence: P/OCF is 1.3x its own five-year median, while trailing-twelve-month revenue growth has cooled to -9.65%.
The read leans on the robust multiples — P/OCF at the 98th percentile of its range and EV/EBITDA at the 99th percentile — with ROIC of 9.22% as the quality check; the headline P/E of 9.11x is treated as the noisy counterpoint.
- Honeywell International Inc. closed at $246 on August 7, 2026 with a market cap of $78.03B.
- This is a non-consensus bear case: across 19 analysts the average price target is $263, 6.86% from the current price, against a buy-leaning Street.
- P/OCF is 15.43x versus a 12.15x five-year median (1.3x of it), at the 98th percentile of its range.
- EV/EBITDA is 15.46x (median 10.20x) at the 99th percentile, and P/S is at the 93rd percentile of their own five-year ranges.
- Five-year revenue CAGR is 1.25% and five-year free-cash-flow CAGR is 0.34%.
- ROIC is 9.22%, operating margin is 14.09%, and the headline P/E is 9.11x.
The Setup
The robust cash, enterprise, and revenue multiples versus their own five-year history, with the growth and quality support behind them.
The Read
This note was not written to order — it was commissioned by the data. Honeywell International Inc. screened because several of its robust valuation multiples sit in the top quartile of their own five-year ranges, with revenue growth cooled to -9.65%. The result is a multiple near the top of its own range resting on growth that has already slowed, and the rest of this read tests whether the divergence holds up across cash flow, growth, and quality.
The case rests on the cleaner multiples, not the headline one. P/OCF is 1.3x its own five-year median and EV/EBITDA is 1.5x its own. The question this note answers is whether the business underneath those multiples justifies where they trade.
Current compounder snapshot · HON
Live supporting context; not part of the article's frozen 2026-08-07 evidence snapshot.
- Score
- 18/100
- 10Y CAGR
- -0.3%
- Median YoY
- 2.1%
- YoY volatility
- σ 9.6pp· smooth
- Quarters ≥ 20%
- 0 of 40
- Negative quarters
- 16
- Valuation vs own 10Y history
- P/S 2.1x · 10Y median 1.8x · 90th percentile · as of Aug 10, 2026
How this score is computed
- Quarters at or above 20%: 0 of 40 → 0 of 40 pts
- Steadiness (typical swing 9.6pp) → 18.1 of 25 pts
- Pace (median 2.1% YoY) → 0 of 20 pts
- Latest quarter (-6.1% YoY) → 0 of 15 pts
- Score: 18 of 100
Annualized revenue (TTM) · by quarter, last 40
Quarterly YoY revenue growth vs the 20% line
P/S multiple vs its 10Y median
Why It Stands Out
The divergence screener fires only on a quantified, multi-signal anomaly in a company's own history, never on an opinion. Here it fired because the robust cash, enterprise, and revenue multiples are clustered in the top quartile of their own five-year ranges at the same time, which is far harder to dismiss as noise than any single ratio moving on its own.
That clustering is the point. P/OCF at the 98th percentile of its range, EV/EBITDA at the 99th percentile, and P/S at the 93rd percentile are three different lenses — cash, enterprise value, and revenue — agreeing with one another, so the read does not depend on which multiple you happen to trust.
Each multiple vs its own five-year history
What each valuation multiple reads now, its median over the past five years, and the latest observation's percentile within that range. Percentiles describe historical position, not whether a security is attractive or unattractive.
P/OCF — price to operating cash flow
- Now
- 15.43x
- Five-year median
- 12.15x
- Where it sits in its five-year range
- 98th percentile
EV/EBITDA — enterprise value to EBITDA
- Now
- 15.46x
- Five-year median
- 10.20x
- Where it sits in its five-year range
- 99th percentile
P/S — price to sales
- Now
- 2.17x
- Five-year median
- 1.86x
- Where it sits in its five-year range
- 93rd percentile
Valuation Versus Its Own History
Start with price-to-operating-cash-flow, which measures operating cash before capital spending and therefore does not capture reinvestment needs. P/OCF is 15.43x against a five-year median of 12.15x — 1.3x the median, the 98th percentile of its own range and near the high end of its five-year history. Free cash flow has a five-year growth rate of 0.34%.
EV/EBITDA confirms the read on an enterprise basis at 15.46x versus a 10.20x median — the 99th percentile of its own range — and P/S backs it on a revenue basis at the 93rd percentile, which matters because P/S is the multiple least disturbed by one-time charges. When the cash, enterprise, and revenue multiples all sit in the same band of their own history, the valuation signal is unusually coherent.
HON price-to-operating-cash-flow Chart
Price-to-operating-cash-flow is shown first because it measures operating cash before capital spending; it still omits reinvestment needs and should be read with EV/EBITDA and price-to-sales.
P/OCF is 15.43x today versus a 12.15x five-year median — 1.3x of it, the 98th percentile of its range.
P/OCF sits at the 98th percentile of its own five-year range — the gap between where the cash multiple trades today and where it has historically sat is the heart of the divergence.
HON EV/EBITDA Chart
EV/EBITDA brings the capital structure into the multiple, so debt and cash are not ignored the way an equity-only ratio ignores them.
EV/EBITDA is 15.46x today versus a 10.20x five-year median — 1.5x of it, the 99th percentile of its range.
EV/EBITDA at the 99th percentile of its own range confirms the P/OCF read on an enterprise basis, because an equity multiple higher or lower in its own range can be an artifact of leverage that EV/EBITDA strips out.
HON price-to-sales Chart
Price-to-sales is the revenue-anchored multiple, least disturbed by one-time charges that can swing earnings and even EBITDA in a single quarter.
P/S is 1.2x its own five-year median, at the 93rd percentile of its range.
P/S at the 93rd percentile of its own range matters most beside net margin of 22.73%, because a revenue multiple is only as defensible as the margin the revenue converts into.
Growth And Cash Support
A multiple near the top of its own range only holds up if growth keeps accelerating, so the growth trend carries real weight. Revenue has a five-year growth rate of 1.25% and free cash flow 0.34%. The risk is sharpest when the multiple has climbed in its own range while growth is cooling.
This is the cross-check that separates a high multiple backed by delivered growth from one that assumes growth keeps accelerating. Free-cash-flow growth of 0.34% against a P/OCF at the 98th percentile of its range is the heart of the risk: if that growth keeps fading, the high multiple has little left to stand on.
HON revenue
Revenue history is the business-expansion evidence the valuation multiple has to be judged against.
Five-year revenue CAGR: 1.25%. This is endpoint-to-endpoint from the fiscal years shown — a depressed or negative start year can inflate it, so read it against the recent bars.
A five-year revenue CAGR of 1.25% is the demand that the multiple is being paid for; the divergence only matters if revenue is still moving while the multiple has re-rated.
HON free cash flow
Free cash flow is the cash the business actually throws off, the support behind both the P/OCF read and the quality case.
Five-year free-cash-flow CAGR: 0.34%.
The five-year free-cash-flow growth rate is 0.34%: a multiple only means what the cash behind it does, so the recent trajectory of this line — not just the five-year average — decides whether the read holds.
Quality And Margins
Quality frames how the multiple's position in its own range reads. Return on invested capital of 9.22% sits beside an operating margin of 14.09%; the weaker those returns, the less of the multiple's position those economics account for.
Net margin of 22.73% keeps the P/S read honest, because a revenue multiple is only defensible when the revenue converts to profit. Read together, ROIC and margins tell you whether the multiple's position rests on durable returns or on returns already fading.
HON ROIC Chart
Return on invested capital is the quality test — whether the company earns more than its cost of capital on the money it puts to work.
Latest ROIC: 9.22%.
ROIC of 9.22% is the quality test behind the multiple: strong, steady returns on capital can justify a richer multiple, while weak or fading returns make an extended one harder to sustain — so the quality trend, not the multiple alone, decides whether its position in its range is earned.
Bull/Bear Case
The case for this note: robust multiples in the top quartile of their own five-year ranges against free-cash-flow growth of 0.34% and ROIC of 9.22% — a top-of-range valuation whose growth support is thinning. The headline P/E of 9.11x is the counterpoint; where it disagrees with the cash multiples it usually reflects one-time items rather than the underlying value.
The other side: a high multiple can persist. If quality and growth hold up, the position in its range may simply hold. The case is conditional on the cash and growth figures, which the next section makes falsifiable.
This is a non-consensus bear case relative to Wall Street. The average analyst price target of $263 sits above the current price (6.86%), set by a buy-leaning Street. That disagreement is the point — the own-history multiples flag a setup the sell-side has not yet embraced, which is where the divergence between price and record is widest.
Bull and bear case
Divergence support
- P/OCF at the 98th percentile of its own five-year range is the core of the bearish case — the cash multiple sits near the top of where it has historically traded.
- EV/EBITDA at the 99th percentile and P/S at the 93rd percentile of their own ranges show the premium spans more than one lens.
Divergence risk
- ROIC of 9.22% and operating margin of 14.09%: durable business quality can let a premium multiple persist, so the de-rating case is conditional on quality or growth slipping.
- The headline P/E of 9.11x is the counterpoint — where it disagrees with the cash multiples, reported earnings may carry one-time items worth checking.
HON P/E ratio Chart
The headline P/E is the counterpoint, not the anchor — GAAP earnings absorb impairments, tax items, and non-cash charges that the cash and revenue multiples sidestep.
Trailing P/E: 9.11x.
A trailing P/E of 9.11x is the noisiest read here; when it disagrees with the cash and EV multiples, the gap usually says more about one-time items in reported earnings than about the valuation, which is why this note leans on P/OCF and EV/EBITDA instead.
What Could Change The View
This thesis is designed to be proven wrong cleanly. It breaks if growth re-accelerates from 0.34%, or if the multiples fall back toward the middle of their own ranges — either would mean the position was backed by delivered growth rather than stretched past it.
It also weakens if the business sustains its growth, because a high multiple backed by real acceleration is very different from one priced as if acceleration continues. Each of these is a specific, monitorable trigger rather than a vague caveat.
Final Read
Put together, the note is a single, testable claim: Honeywell International Inc. carries cash, enterprise, and revenue multiples in the top quartile of their own five-year ranges — high relative to its own observed five-year range — against a five-year free-cash-flow growth rate of 0.34% and ROIC at 9.22%. Whether that gap is a risk depends entirely on those figures, and every number here is sourced from the dated series shown in the charts above.
FAQ
Why does this bear case lead with P/OCF instead of the P/E ratio?
Price-to-operating-cash-flow is included because it measures operating cash before capital spending. P/OCF is 1.3x its own five-year median; unlike the trailing P/E of 9.11x, it is less affected by some non-cash accounting items, but it also omits reinvestment needs and is not a standalone valuation verdict.
Why did TGMCharts publish this note on HON now?
Because the company's own numbers stood out — we publish only when the data does. P/OCF, EV/EBITDA, and P/S are clustered in the same band of their own five-year ranges — at the 98th percentile, 99th percentile, and 93rd percentile respectively — while the five-year free-cash-flow growth rate is 0.34%.
What would prove this thesis wrong?
Growth re-accelerating from its recent pace, or the robust multiples falling back toward the middle of their own ranges. Either would mean the high multiple is being earned rather than stretched, and the premium is justified.
What would change our mind
- Free-cash-flow growth re-accelerating past its five-year rate of 0.34% would justify the premium this case argues against.
- ROIC climbing from 9.22% would strengthen the quality argument for the elevated multiples.
- The stretched multiples cooling toward mid-range while operating margin holds at 14.09% would resolve the divergence without a drawdown.
The bottom line
The bear case rests on Honeywell International's own record: its cash, enterprise, and revenue multiples have moved out of line with its five-year history, and every figure here is checked against the company's reported data before publishing.
Read next: HON fundamentalsContinue with Honeywell International's full stock page.How we checked this researchShowHide
Data snapshot · By TGMCharts Research.
Every number in this note comes from data we compute and store ourselves from the company's reported figures, plus verbatim excerpts from its SEC filings. When a value isn't available we say so — we never fill gaps with estimates.
Latest filing excerpt
10-Q · filed 2026-04-23 · period 2026-03-31 · SEC EDGAR source
- “The Company is currently evaluating the impacts of this guidance on the Company's Consolidated Financial Statements.”
- “The carrying amount of any assets, including goodwill, that are part of the disposal groups, but not in the scope of ASC 360-10, Property, Plant, and Equipment, are tested for impairment under the relevant guidance prior to measuring the disposal groups at fair value, less costs to sell.”
- “REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS The Company has a comprehensive offering of products and services, including software and technologies, that are sold to a variety of customers in multiple end markets.”
- “Beginning in 2026, the disaggregation of revenue within its Building Automation, Process Automation and Technology, and Industrial Automation segments is reported based on business model.”
Exhibit sources
Research trail
Every number, checked
Every numeric or dated claim in this note was checked against our stored company data before publishing — each figure below links to the page it comes from.