Since November 2024, Honeywell has been in a holding pattern, posting a small loss of 4.5% while floating around $218.70.

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Why Is Honeywell Not Exciting?

We don't have much confidence in Honeywell. Here are three reasons why HON doesn't excite us and a stock we'd rather own.

1. Slow Organic Growth Suggests Waning Demand In Core Business

We can better understand General Industrial Machinery companies by analyzing their organic revenue. This metric gives visibility into Honeywell’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, Honeywell’s organic revenue averaged 2.8% year-on-year growth. This performance was underwhelming and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations.Honeywell Organic Revenue Growth

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Honeywell’s revenue to rise by 3.3%, close to its 4.4% annualized growth for the past two years. This projection is underwhelming and suggests its newer products and services will not catalyze better top-line performance yet.

3. Free Cash Flow Margin Dropping

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

As you can see below, Honeywell’s margin dropped by 3.2 percentage points over the last five years. If its declines continue, it could signal increasing investment needs and capital intensity. Honeywell’s free cash flow margin for the trailing 12 months was 12.9%.Honeywell Trailing 12-Month Free Cash Flow Margin

Final Judgment

Honeywell’s business quality ultimately falls short of our standards. That said, the stock currently trades at 20.4× forward P/E (or $218.70 per share). At this valuation, there’s a lot of good news priced in - we think there are better stocks to buy right now. We’d suggest looking at one of our top digital advertising picks.

Stocks We Like More Than Honeywell

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

Story Continues

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

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