Otis Singleton
Honeywell International Inc. and General Electric Company are two industrial giants with sprawling operations. Both companies have a broad range of businesses under their umbrellas, and investors have long debated which is the better investment. While GE has historically boasted larger revenue numbers, Honeywell has been described as the better-run company, with lower costs as a share of revenue in the industrial sector. GE has also suffered from negative cash flow growth since 2011, and Honeywell has outperformed it in terms of book value since the Great Recession. However, GE has been working to reduce its debt over the past decade, and its higher expected revenue growth makes it a better bet than Honeywell according to some analysts.
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What You'll Learn
Revenue and value
In terms of revenue and value, Honeywell has demonstrated more impressive performance and growth compared to General Electric (GE).
Honeywell's brand is ranked #179 in the Global Top 1000 Brands, with a market cap of $141.58 billion as of March 2016. In comparison, GE is ranked #336 with a market cap of $115.68 billion during the same period. While GE's current market cap as of July 2025 is $272.4 billion, Honeywell's is $151.6 billion. Honeywell's trailing 12-month revenue is $39.2 billion with a 14.5% net profit margin, while GE's is $39.7 billion with a 17.6% net profit margin. Honeywell's stock price increased by 4.4% in 2025, while GE's stock price increased by 53.1% during the same period.
Honeywell has demonstrated more impressive revenue growth compared to GE, especially in 2015 when Honeywell grew its profits while GE lost $6 billion. Since the Great Recession, Honeywell has also outperformed GE in terms of book value. Honeywell's lowest historical growth rate of 6.4% is higher than GE's average growth rate of 5.665% over the same period.
Despite Honeywell's strong performance, some analysts argue that GE may offer a better value proposition. GE's breakup plan in 2022 and its exposure to commercial aviation make it an attractive investment option. Additionally, GE's stock trades at a lower valuation multiple than Honeywell, which may make it a more attractive investment for some investors.
In summary, while Honeywell has demonstrated stronger revenue growth and currently has a higher market cap and brand ranking, GE may present a better value opportunity for investors due to its lower valuation and potential for recovery in the aviation sector.
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Business performance
In terms of business performance, Honeywell has been regarded as one of the highest-quality companies in the stock market, with a diversified portfolio and a management team committed to creating innovative investments. Honeywell's brand is ranked #179 in the Global Top 1000 Brands, with a market cap of $141.58 billion. The company has seen consistent earnings before interest, taxation, depreciation, and amortization (EBITDA), and its stock price has risen 540% since 2001. Honeywell has also outperformed GE in terms of book value since the Great Recession.
Honeywell's segments, such as Honeywell Building Technologies (HBT), have growth potential due to the increased focus on healthy and clean buildings during the pandemic. Additionally, its safety and productivity solutions (SPS) segment has benefited from the demand for warehouse automation and mobile and barcode scanners.
On the other hand, General Electric (GE) has faced challenges in recent years. Its power segment has suffered due to the declining demand for gas turbines as the energy sector transitions to renewable energy sources. GE's renewable energy business also faced challenges and remained unprofitable in 2020. The aviation business took a hit during the pandemic, and the company has had negative cash flow growth since 2011. GE's brand is ranked #336 in the Global Top 1000 Brands, with a market cap of $115.68 billion.
Despite GE's struggles, some analysts believe that GE has the potential to improve its EBITDA more than Honeywell in the coming years. GE's turnaround prospects are promising, and its stock appears undervalued. GE's breakup plan, which involves splitting the company into three businesses with investment-grade debt, could result in improved performance. CEO Larry Culp aims to generate more than $7 billion in free cash flow (FCF) in 2023, which could boost the company's value.
In summary, Honeywell has demonstrated stronger business performance in recent years, with consistent financial growth and a diversified portfolio. However, GE is showing signs of a potential turnaround, and its stock may be an attractive investment opportunity for those willing to take on some risk.
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Shareholder value
When it comes to shareholder value, Honeywell has a clear advantage over General Electric (GE). Honeywell has consistently outperformed GE in terms of book value and has seen its stock increase by 540% since 2001, while GE's stock has fallen by 76%. Honeywell has a diversified industrial portfolio that generates revenue from a wide range of industries, and its management team is committed to creating innovative investments. The company also has some of the lowest sales, general, and administrative costs as a share of revenue in the industrial sector, which further enhances its shareholder value.
In contrast, GE has faced significant challenges in recent years, particularly in its power segment due to the declining demand for gas turbines and the transition to renewable energy. GE's renewable energy business has also struggled, remaining unprofitable and a cash drain in 2020. The pandemic's impact on air travel also hit GE's aviation business hard in 2020. While GE has been working to reduce its debt and improve its financial performance, it still lags behind Honeywell in terms of shareholder value.
Honeywell's brand is ranked #179 in the Global Top 1000 Brands list, while GE's brand is ranked #336. Honeywell's market cap is $141.58 billion, significantly higher than GE's market cap of $104.6 billion to $115.68 billion. Honeywell has also returned 250% to its shareholders since January, indicating strong shareholder value.
While GE has the potential to improve its EBITDA more than Honeywell in the coming years, Honeywell currently offers higher stability and consistency in its financial performance. Honeywell's EBITDA is far more consistent, and the company has a diversified portfolio that helps mitigate risks. As of 2022, both companies have heavy exposure to commercial aviation, which has been impacted by the pandemic, but Honeywell has growth opportunities in other segments, such as building technologies and safety and productivity solutions.
Overall, Honeywell has a stronger track record of creating shareholder value, with consistent financial performance, a diversified business portfolio, and efficient cost management. While GE has faced challenges, it is working towards improving its financial health and unlocking value for investors through business restructuring. However, as of the data available, Honeywell remains the preferred choice for investors seeking long-term shareholder value.
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Conglomerate discount
The conglomerate discount is calculated by adding together the intrinsic value of all the smaller companies within a conglomerate and then subtracting the market capitalisation for the conglomerate. The intrinsic value is a metric used to determine the underlying value of a company and how much cash it generates. The sum-of-parts value tends to be greater than the value of the conglomerate's stock by anywhere between 10% and 15%.
The conglomerate discount is not permanent and can be removed through deconglomeration and focusing on one or a few businesses via various corporate restructurings. This can result in better value recognition for each of the parts and allow each business to pursue independent strategies.
The conglomerate discount is substantially bigger in the US and Western Europe than in Asian countries. This may be because large conglomerates in Asia have significant political connections and an understanding of how to operate in difficult markets, allowing them to spread their expertise across many industries.
It is important to note that the conglomerate discount is not always an accurate reflection of a conglomerate's value. A poorly defined peer group can lead to a significant valuation error. When investors measure each business unit against its true peers, the conglomerate discount may disappear completely.
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Diversification
When it comes to diversification, Honeywell has a clear edge over General Electric (GE). Honeywell is often described as the epitome of a diversified industrial company, generating revenue from a diverse array of industries.
Honeywell's diversification is evident in its various segments, including Honeywell Building Technologies (HBT), which offers building management systems, software, and hardware for complex buildings, fire safety, and security. The company's safety and productivity solutions (SPS) segment is also thriving, particularly in warehouse automation and e-commerce logistics. Additionally, Honeywell's management team is committed to innovative investments, aiming to create "breakthrough products". This diversified approach has paid off, with Honeywell's stock surging by 540% since 2001, in stark contrast to GE's stock decline of 76% during the same period.
On the other hand, GE has faced challenges due to its concentration in certain sectors. For instance, GE's power segment has struggled as the demand for gas turbines declined with the global shift towards renewable energy sources. Similarly, GE's renewable energy business has been burdened by unprofitable legacy contracts, resulting in cash flow issues. The aviation business of GE also took a hit during the pandemic due to the decline in air travel.
While GE is working on a turnaround, with its finance businesses transitioning into GE Industrial, Honeywell's diversified business model has proven more resilient and adaptable to market changes. This is reflected in Honeywell's consistent earnings before interest, taxation, depreciation, and amortization (EBITDA), in contrast to GE's more volatile performance in this metric.
In summary, Honeywell's diversification across multiple industries has positioned it as a higher-quality company in the stock market, outperforming GE in terms of growth and stability.
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Frequently asked questions
General Electric Company, doing business as GE Aerospace, designs and produces commercial and defence aircraft engines, integrated engine components, electric power, and mechanical aircraft systems. Honeywell International Inc. is better described as an aircraft supplier and auto parts company, but it also has an aerospace segment.
Both companies have a grade of B for Earnings Estimate Revisions. However, GE has a Value Score of 11, which is considered Ultra Expensive, while Honeywell International is considered a better business operator in the industry. GE has higher revenue numbers, with sales that were 8x larger than Honeywell's in 2006. However, Honeywell has outperformed GE in terms of book value since the Great Recession.
GE has had negative cash flow growth since 2011 and lost $6 billion in profits in 2015. Honeywell, on the other hand, grew its profits in 2015 and has been reducing its debt over the past decade. Analysts believe that Honeywell's fundamentals have continued to line up more favourably, and it may be a better purchase than GE.
Both companies are sprawling conglomerates that are subject to the ebbs and flows of different industries and global economies. Their share prices may be impacted by the "conglomerate discount". Additionally, the resurgence of COVID-19 cases and supply chain difficulties have negatively impacted both companies in recent years.
