Like other conglomerates, Honeywell (NYSE:HON) has heavily focused on one area lately, focus. In today’s economy, multiple divisions in different industries have become difficult to manage under the same umbrella.

Honeywell plans to increase its focus, as divisions dealing with activities such as homes and transportation spin off into separate firms. This should work to the benefit of Honeywell stock as it begins anew as a better-directed industrial play.

Honeywell Will Become a Leaner Company

In its bid to concentrate in fewer areas, two new firms will emerge from Honeywell. One spinoff, called Garrett Motion, places the transportation systems and automotive divisions into a new company. Honeywell stock shareholders will receive one share of this new GTX stock for every 10 shares of HON stock owned.

Soon after, Wall Street expects the Homes and ADI Global Distribution will become a company called Resideo Technologies. Most expect a spinoff where owners of HON stock also receive shares of Resideo.

Also, it allows Honeywell to place a greater emphasis on its remaining divisions. Increased defense spending and travel demand should serve the aviation division well. Also, the increase in e-commerce will benefit HON’s warehouse automation business as it helps customers such as Amazon.com (NASDAQ:AMZN).

This follows a trend of conglomerates shedding divisions to become more focused. Peers such as General Electric (NYSE:GE), United Technologies (NYSE:UTX) and Johnson Controls (NYSE:JCI) have either explored selling or have sold off divisions themselves.

Spinoffs Should Improve Metrics

Amid these spinoffs, the prospects for Honeywell stock continue to improve. Earnings estimates have steadily moved higher over the last few months. If these forecasts hold, they will take Honeywell stock to a forward price-to-earnings (PE) ratio of around 20.3. This comes in below the average PE of 25 that the company has seen over the last five years.

In my analysis early this year, I pointed out that revenue had become stagnant over the last few years. In that time, the company grew profits by cutting costs. While lower costs benefit investors, companies can only cut costs so much without affecting profits. For this reason, I do not see this as a long-term growth solution.

Fortunately, the company appears poised to grow profits through increased revenues. HON saw revenue growth average only about 1.5% per year over the last five years. Today, analysts expect the company to earn 6.8% revenue growth this year and 4.2% the next year.

Profit growth averaged 9.6% per year over the last five years. Wall Street expects that average to rise to 10.4% per year over the next five years.

This should also boost the hopes that Honeywell stock will continue its annual dividend hikes. The company has paid dividends since 1887, though its record of annual increases only goes back to 2011. Still, the company pays an annual dividend of $2.98 per share, amounting to a yield of just under 1.9%.

Honeywell Outperforms Conglomerate Peers

HON stock has become the only industrial conglomerate expected to see a double-digit growth rate in profits. For this reason, I now see HON stock as the stock to own in this industry.

Honeywell now beats GE in both size and performance. This has become noteworthy as GE tried to buy Honeywell in 2000 when it was less than 5% of GE’s size. Although GE trades at a forward PE of about 13.1, it also faces doubts about its long-term stability.

JCI also trades at a lower PE. While it enjoys more stability than GE, it also supports a much lower growth rate. UTX has also failed to match Honeywell’s expected double-digit growth rate.

Like other industrials, Honeywell will not likely attract the attention, headlines or the high multiples of newer tech stocks. However, if one wants a stable company that grows earnings by double digits and pays an average but growing dividend, HON stock should serve them well.

Bottom Line on Honeywell Stock

HON’s spinoffs should give the company the focus it needs to maintain double-digit growth, and boost the price and dividend of Honeywell stock.

With several non-core divisions becoming two separate companies, the remaining divisions such as aviation will benefit from favorable trends in its businesses. The increased emphasis on fewer divisions should help the company boost revenue and take its profit growth into the double digits.

Such moves have given Honeywell stock the highest profit growth and the highest PE ratio among industrial conglomerates. Despite those facts, HON’s PE remains below the S&P 500 average and its five-year PE ratio average.

As a smaller and nimbler Honeywell, this company will become better positioned to capitalize on the opportunities, and by extension, better able to profit owners of HON stock.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.