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Honeywell (NYSE: HON) recently released its Q1 results, with revenues and earnings exceeding the street estimates. It reported sales of $9.8 billion and adjusted earnings of $2.51 per share, compared to the consensus estimates of $9.6 billion and $2.21, respectively. The company benefited from strong building automation sales. Furthermore, Honeywell narrowed its outlook for 2025.

HON stock, with -11% returns since the beginning of the year (as of April 28), has fared slightly worse than the S&P 500 index, down 6%. A weakness in safety and productivity solutions segment in the recent quarters and the ongoing tariff concerns have put downward pressure on the company’s stock performance. But, if you are looking for an upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

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Honeywell’s revenue of $9.8 billion in Q1 was up 8% y-o-y, led by Aerospace Technologies, up 14%. Looking at other segments, Building Automation sales were up 19% and Energy & Sustainability Solutions revenue saw a 2% rise. However, Industrial Automation sales were down 4%, due to continued softness in the safety and sensing technologies business. Honeywell’s segment profit margin of 23% in Q1’25 was unchanged y-o-y. This resulted in the bottom line of $2.51, up 7% y-o-y. Looking forward, Honeywell expects its full-year 2025 sales to be in the range of $39.6 billion to $40.5 billion, and its adjusted earnings to be in the range of $10.20 and $10.50, now reflecting a 3% to 6% y-o-y earnings growth, vs. 2% to 6% growth anticipated earlier.

A Q1 beat and narrowing of guidance boded well with the investors, and HON stock popped 5% post the results announcement in pre-market trading. However, if we look at a slightly longer time frame, the performance of HON stock with respect to the index over the recent years has been quite volatile.

In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment around tariffs, could HON face a similar situation as it did in 2021, 2023, and 2024 and underperform the S&P over the next 12 months — or will it see a strong jump? While we will soon update our model to reflect the latest results, HON stock seems to be undervalued. At its current levels of around $210 (pre-market), it’s trading at 20x forward expected earnings of $10.30 per share, versus the stock’s last five-year average P/E ratio of 23x. We believe that the current valuation discount presents an attractive entry point for investors seeking robust long-term returns in HON stock.

While HON stock appears to have more room for growth, it is helpful to see how Honeywell’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.