Honeywell's (NASDAQ:HON) third-quarter earnings beat expectations with adjusted EPS hitting $2.58, but revenue slipped below the mark at $9.7 billion, missing analyst forecasts. The revenue shortfall triggered a drop in shares and a revised full-year outlook to $38.6-$38.8 billion, lower than the prior $39.2 billion consensus. Despite this, the company still pulled off 3% organic growth, with aerospace leading the charge, posting 10% gains. Aerospace segment has been delivering double-digit growth for nine consecutive quarter. CEO Vimal Kapur highlighted the company's resilience amid sales headwinds, crediting the Accelerator operating system for keeping segment margins strong at 23.6%.

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Aerospace's double-digit streak continued, driven by robust demand in defense and space, while Building Automation added some stability. However, not everything was smooth sailing; the operating margin shrank 180 basis points to 19.1%, mainly due to an impairment tied to its planned exit from the personal protective equipment (PPE) business. Meanwhile, Industrial Automation took a hit with a 5% dip in organic sales, though Honeywell's cash flow rose 10% year-over-year to $1.7 billion, showcasing its knack for navigating cost challenges.

Looking ahead, Honeywell adjusted its EPS outlook to $10.15-$10.25 and is doubling down on portfolio optimization. With plans to spin off Advanced Materials and move away from PPE, the focus is on high-growth areas like automation and energy. The company's strategic shift aims to tackle near-term challenges head-on while setting the stage for stronger, longer-term gains, keeping its sights on becoming a leader in automation, aviation, and energy transitions.

This article first appeared on GuruFocus.