Honeywell vs. 3M: Which Industrial Conglomerate Stock Should You Bet On?

Core Viewpoint - Honeywell International Inc. and 3M Company are both positioned to benefit from growth in the aerospace and industrial sectors, but Honeywell appears to have stronger fundamentals and growth prospects for 2025 compared to 3M [2][28]. Honeywell's Performance - Honeywell's commercial aviation aftermarket business is a key growth driver, with a 7% year-over-year sales increase in Q2 2025 [3]. - The defense and space business saw a 13% year-over-year sales surge in Q2 2025, supported by robust defense spending [4]. - The Building Automation segment's organic sales increased by 8% year over year, with building products sales growing by 9% [5][6]. - Honeywell expects overall revenues for 2025 to be in the range of $40.8-$41.3 billion, with organic revenues anticipated to grow by 4-5% year over year [7]. - The company returned $5.08 billion to shareholders through dividends and share buybacks in the first half of 2025 [8]. - However, the Industrial Automation segment faced a 5% decline in sales year over year, with expectations of low to mid-single-digit declines for 2025 [9]. - Honeywell's long-term debt increased to $30.2 billion, up from $25.5 billion at the end of 2024, raising concerns about its cash position of $10.3 billion [10]. 3M's Performance - 3M's Safety and Industrial segment experienced a 2.5% growth, while the Transportation and Electronics segment saw a 1% increase in Q2 2025 [11][13]. - The company expects total adjusted organic sales to grow by 2% year over year for 2025 [13]. - 3M is undergoing structural reorganization to streamline operations and expects annual pre-tax savings from these actions by 2025 [14]. - In the first half of 2025, 3M returned $3 billion to shareholders through dividends and buybacks [15]. - Weak demand in consumer retail markets and challenges in the automotive OEM business are concerns for 3M [16]. - 3M's long-term debt stood at $12.5 billion, with cash and cash equivalents at $3.7 billion, indicating a high debt level [17]. Financial Estimates and Valuation - Honeywell's 2025 sales and EPS estimates indicate year-over-year growth of 5.7% and 6.3%, respectively, with recent upward revisions [18]. - In contrast, 3M's sales estimates for 2025 imply an 8.8% decline, while EPS estimates show an 8.5% growth [18]. - Honeywell shares have gained 3.4% over the past six months, while 3M shares have increased by 6.4% [23]. - 3M trades at a forward P/E ratio of 18.89, while Honeywell's forward P/E ratio is 19.61 [24]. Final Assessment - Both companies hold a Zacks Rank 3 (Hold), making it challenging to choose between them [27]. - 3M's momentum in key markets is hindered by consumer retail softness and ongoing litigation issues [27]. - Honeywell's diversified portfolio and strong growth prospects position it as a more favorable investment despite its higher valuation [28].