Reviewing Honeywell International (NASDAQ:HON) & 3M (NYSE:MMM)

3M (NYSE:MMM) and Honeywell International (NASDAQ:HON) are both large-cap industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, risk, dividends and institutional ownership.

Profitability

This table compares 3M and Honeywell International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
3M	14.01%	123.11%	12.70%
Honeywell International	24.36%	25.62%	6.56%

Valuation and Earnings

This table compares 3M and Honeywell International”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
3M	$24.95 billion	3.91	$3.25 billion	$6.71	28.13
Honeywell International	$37.44 billion	1.94	$4.73 billion	$22.23	10.27

Honeywell International has higher revenue and earnings than 3M. Honeywell International is trading at a lower price-to-earnings ratio than 3M, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

3M has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500. Comparatively, Honeywell International has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

Dividends

3M pays an annual dividend of $3.12 per share and has a dividend yield of 1.7%. Honeywell International pays an annual dividend of $7.14 per share and has a dividend yield of 3.1%. 3M pays out 46.5% of its earnings in the form of a dividend. Honeywell International pays out 32.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. 3M has raised its dividend for 1 consecutive years and Honeywell International has raised its dividend for 14 consecutive years. Honeywell International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

65.2% of 3M shares are owned by institutional investors. Comparatively, 75.9% of Honeywell International shares are owned by institutional investors. 0.2% of 3M shares are owned by company insiders. Comparatively, 0.2% of Honeywell International shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for 3M and Honeywell International, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
3M	1	8	6	2	2.53
Honeywell International	1	12	13	0	2.46

3M presently has a consensus price target of $190.07, suggesting a potential upside of 0.71%. Honeywell International has a consensus price target of $249.96, suggesting a potential upside of 9.46%. Given Honeywell International’s higher possible upside, analysts clearly believe Honeywell International is more favorable than 3M.

Summary

Honeywell International beats 3M on 10 of the 18 factors compared between the two stocks.

About 3M

3M is a diversified science and manufacturing company that develops products for businesses and consumers. Its offerings include workplace safety equipment, adhesives and abrasives, filtration materials, automotive and electronics components, and home and office products such as Post-it Notes and Scotch brand tapes. Founded in 1902 as the Minnesota Mining and Manufacturing Company, 3M began as a mining venture before expanding into materials science and industrial manufacturing. The company adopted the name 3M in 2002 and is headquartered in St. Paul, Minnesota.

About Honeywell International

Honeywell International is a technology and manufacturing company whose products and services support aerospace, buildings, industrial operations and energy applications. Its offerings include aircraft systems and components, building controls and safety technologies, industrial automation and process-control systems, and specialty materials. The company serves commercial and government customers in markets around the world. Its technologies are used in settings ranging from aircraft and commercial buildings to factories, warehouses and energy facilities.