What Does HON's Warren Buffett Score Really Tell You?

Honeywell International (HON), the large-cap player in Aerospace & Defense, just hit a 68% score under Warren Buffett’s Patient Investor strategy via Validea’s analysis. But here’s the thing—that number sits just below the 80% threshold where the model typically shows genuine interest. So what’s the actual story here?

Breaking Down HON Against Buffett’s Playbook

Buffett’s strategy hunts for one thing: companies with rock-solid, predictable profits, lean balance sheets, and fair-value pricing. HON passes most of the tests. Let’s walk through the scorecard:

The good news stacks up quickly. HON clears the bar on earnings predictability—meaning its income stream behaves consistently over time. Debt service? ✓ Handled well. Return on equity (ROE)? ✓ Solid metrics there. Return on total capital (ROTC)? ✓ Also checking out. Even free cash flow generation passes the sniff test.

But here’s where the cracks show. HON fails on two critical points: how the company deploys retained earnings and misses the expected return threshold Buffett’s model demands. That’s why it stalls at 68% instead of breaking through the 80% confidence level.

Why These Failures Matter

When a company fails the “use of retained earnings” test, it suggests the firm might not be reinvesting profits back into high-return opportunities efficiently enough. For a warren buffett portfolio strategy, this is a red flag—Buffett wants to see capital being put to work productively, not sitting idle or being wasted on mediocre projects.

The expected return shortfall is equally telling. Even if HON checks boxes today, the model forecasts that future returns won’t meet Buffett’s hurdle rate. In a 68% scenario, you’re looking at a “maybe” stock rather than a “definitely” stock.

The Warren Buffett Lens Explained

Why does this analysis framework matter? Warren Buffett built Berkshire Hathaway into a $700+ billion behemoth by sticking to predictable, quality businesses trading at reasonable prices. He’s the proof that consistent fundamentals and disciplined valuation beat market noise over decades. His 80%+ threshold isn’t random—it represents stocks that historically align with his best-performing portfolio picks.

A 68% rating on HON means the stock has merit, but it’s not a screaming buy according to this particular framework. It’s the kind of name that deserves a second look, but it’s not jumping to the top of a warren buffett portfolio watchlist.

The Bottom Line

HON passes more tests than it fails, which explains why it scores in the upper-middle range. But missing the efficiency and return benchmarks keeps it in “interesting but cautious” territory rather than “compelling opportunity” status. For investors following Buffett’s actual portfolio strategies, this is background noise—worthwhile to monitor, but not the kind of conviction signal that gets capital deployed immediately.