Honeywell International (NASDAQ: HON) beat earnings expectations for the quarter, but revenue was soft and earnings were aided by some below-the-line items. Investors weren't impressed, sending Honeywell shares down 4% as of 11:30 a.m. ET.

An underwhelming beat

Honeywell is a diversified manufacturer with exposure to a lot of different businesses, but a lot of those end markets are facing headwinds right now. The company reported third-quarter earnings of $2.58 per share, $0.07 better than expectations, but revenue of $9.73 billion was below the $9.9 billion consensus.

The earnings number benefited from a lower-than-expected share count and effective tax rate. Strip out those gains, and segment profit matched expectations, with aerospace sales down 2%, industrial automation sales down 5%, energy flat, and building automation up 3% year over year.

"Honeywell executed through a challenging environment in the third quarter," CEO Vimal Kapur said in a statement. "We continue to see healthy order rates and sequential growth in our backlog, even excluding the impact of acquisitions closed in the quarter, giving us confidence in our ability to achieve our long-term targets."

Honeywell raised the lower end of its full-year 2024 earnings guidance but lowered its forecast for revenue and free cash flow.

Is Honeywell stock a buy?

Honeywell has been in a near-constant state of portfolio transformation over the past decade. It announced earlier this month it intends to spin off its advanced material business in a format similar to how it shed its automotive and security units in years past. The company also closed about $3.7 billion worth of acquisitions in the quarter while continuing to fund share repurchases and a dividend currently yielding more than 2%.

The moves all make sense on paper, but investors are still waiting for the payoff. Shares of Honeywell have badly underperformed the S&P 500 over the past five years.

Honeywell contains an intriguing set of assets, but this is a stock best kept on your watch list until the company shows it can make good on all that potential.

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