Honeywell vs 3M Q3 2026: Both Sales Rose ~1%, but Organic Growth Was 7% vs 3.3%

Honeywell and 3M are the two best-known diversified U.S. industrial companies, and both are in the middle of breaking themselves up. Honeywell spun off Aerospace on June 29, so Q3 2026 is its first quarter as a standalone automation company (buildings, process plants and factories). 3M spun off its healthcare business, Solventum, in 2024, stopped making PFAS chemicals at the end of 2025, and still sells adhesives, safety gear, electronics materials and consumer products. Both reported almost the same headline sales growth: +1.3% at Honeywell and +1.0% at 3M. Underneath, Honeywell grew more than twice as fast, 3M earned the wider margins, and at both companies the reported EPS figure is the wrong number to read, in opposite directions.

At a glance

• Organic growth: +7% at Honeywell, +3.3% at 3M. Organic growth is sales growth with currency, acquisitions and divestitures stripped out, so it compares the same set of businesses in both years. All three Honeywell segments grew organically. At 3M almost all the growth came from one segment, Safety and Industrial (+7.0%), while Transportation and Electronics grew 0.5% and Consumer shrank 0.2%.
• Reported EPS: −20% at Honeywell, +70% at 3M. Adjusted EPS: +34% and +12%. Honeywell's GAAP figure is pulled down by an $802 million one-time gain in last year's quarter. 3M's is pushed up by a $281 million gain on its remaining Solventum shares. On each company's own adjusted figures, the order is the same as on organic growth.
• Operating cash flow fell about 73% at both, for different reasons. Honeywell's drop ($607M vs $2,306M) is last year's $1,590 million Resideo payment, which will not recur. 3M's ($486M vs $1,756M) is this year's litigation payments, $894 million after tax in the quarter, with $2.8 billion of its PFAS liability now due within 12 months.

Side by side

Operating margin is operating income as a share of sales: what is left after the costs of making, selling and developing products, before interest and tax. The two "preferred" margins in the table are not built the same way. Honeywell's segment margin also leaves out stock compensation, amortization of acquired intangibles and restructuring; 3M's adjusted operating margin leaves out litigation and PFAS-exit costs, the Solventum stake, transformation costs and, from this quarter, amortization. Compare each against its own year-ago figure, not against each other. The EPS levels can't be compared either: Honeywell's share count reflects a one-for-two reverse split on June 29.

Growth: Honeywell broader, 3M narrower

Honeywell's 7% organic growth came from all three businesses: Building Automation +8% (fire and security products led), Process Automation and Technology +8% (LNG and petrochemical projects, plus refining aftermarket), and Industrial Automation +4%. The quarter also answered the main doubt from Q2, when all of Honeywell's growth came from price: this time volume added 2 points alongside 5 points of price, so customers bought more, not just paid more. Its backlog, $18.8 billion, is up 7% excluding the businesses it sold.

3M's 3.3% was slower than the 5.4% it reported in Q2, and it rests on one segment. Safety and Industrial grew 7.0% organically across electrical markets, fire safety, adhesives, personal safety and abrasives. Transportation and Electronics slowed from 5.9% in Q2 to 0.5%, as weak consumer electronics and auto offset semiconductor and data-center gains. Consumer fell 0.2% because U.S. retailers cut their stock, even though sales at the checkout rose. 3M's year-to-date organic growth of 3.3% is below its full-year goal of above 3.5%, so Q4 needs roughly 4% or better.

Margins: where each improvement came from

Both companies widened their margins, but from different sources, and that matters for whether the gains repeat.

At Honeywell, most of the improvement came from head office, not the businesses. Segment profit rose $196 million, but the three segments together added only $56 million (+5%); about $140 million came from lower corporate costs, which fell to $101 million from $241 million as costs left over from the spin-offs were removed. The three segments' combined margin was 23.3% against 22.5%, a far smaller gain than the 370-basis-point headline. That saving is real and should stay, but it happens once: from about Q3 2027 it will be in the year-ago figures. Process Automation's margin also fell 210 basis points to 22.2% on project mix and the lower-margin Johnson Matthey catalyst business it bought in July.

At 3M, the improvement came from the operations of one segment. Safety and Industrial's operating income rose 21.2% to $960 million and its margin rose to 30.1% from 27.1%, which 3M credits to growth and productivity. That segment earned more than half of 3M's segment profit. Transportation and Electronics' margin fell 0.9 points and Consumer's rose 0.8 points. 3M's GAAP operating income rose 7.7%, a cleaner measure of the quarter than its EPS.

What the headline numbers hide

The reported EPS figures distort in opposite directions. Honeywell's GAAP EPS fell 20% because last year's quarter had the $802 million Resideo termination gain; this year's has its own one-off, a $339 million gain on selling WWS/PSS, plus a much lower tax rate. 3M's GAAP EPS rose 70% largely because its Solventum stake gained $281 million in value after losing $94 million a year earlier, and its tax rate fell to 15.7% from 26.8%. Our Honeywell report concluded that adjusted EPS ($2.27) is the fair number; our 3M report concluded the same for its $2.50. In short, Honeywell's GAAP figure understates the quarter and 3M's flatters it.

The adjusted figures have their own soft spots. At Honeywell, the 34% rise leans on lower overhead and lower interest: interest charges fell to $143 million from $263 million after $7.5 billion of debt was repaid. Our report also found that, from the filings alone, it isn't clear how much of the unusually low tax rate is still inside the $2.27. At 3M, about 3 of the 12 points of adjusted EPS growth came from buybacks (adjusted net income rose 9.0%), and this quarter 3M began excluding amortization from adjusted figures, worth about $0.04 a share in Q3.

Buybacks and debt point in different directions. Honeywell bought back nothing that mattered (shares flat) and used cash to cut borrowings, from $34.6 billion at year-end to $16.6 billion (its cash and short-term investments fell to $6.2 billion from $12.7 billion). 3M bought back $3.2 billion of stock in the first nine months, but only about $230 million in Q3, and its debt rose to about $15.0 billion from $12.6 billion, partly from the Madison Fire & Rescue venture with Bain Capital.

Cash conversion is the sharpest difference. Honeywell's operating cash flow was about 78% of continuing net income, and its 74% fall is last year's one-off payment. On a plain definition (operating cash flow minus capital spending) its free cash flow was $530 million, because the company's $688 million adds back $158 million of separation payments. 3M's nine-month operating cash flow was $2,046 million against $3,007 million of net income, with the gap mostly litigation payments that will continue: its PFAS liability is $7.5 billion and the part due within a year jumped to $2.8 billion from $0.7 billion. 3M's inventories (+11.5%) and receivables (+16.5%) have also grown far faster than its 1.6% nine-month sales, partly because of the Madison acquisition.

Takeaway: Both companies reported sales up about 1%, but Honeywell's business grew 7% organically across all three segments while 3M's grew 3.3% on the strength of one. 3M still runs at the higher margins (23.7% GAAP operating margin against 14.8%), and its margin gain came from a real operating improvement in Safety and Industrial, while most of Honeywell's came from a one-time cut in corporate overhead. Neither company's GAAP EPS is the number to read: Honeywell's −20% is understated by last year's gain and 3M's +70% is flattered by its Solventum shares.

Guidance: both raised, by different kinds of increase

Honeywell raised full-year adjusted EPS guidance to $8.40–$8.45 from $8.05–$8.35, organic growth to 4%–5% from 3%–4%, and free cash flow to about $2.1 billion. It expects 5%–6% organic growth in Q4. By our arithmetic in the Honeywell report, its ~20.5% full-year segment margin implies a Q4 margin around 22%, above Q3's 21.3%.

3M raised adjusted EPS guidance to $9.10–$9.15 from $8.80–$8.95, but kept organic growth at above 3.5%, and the new range includes the Madison acquisition and the new amortization treatment. Our 3M report estimates that roughly $0.16 of the $0.25 midpoint increase is the accounting change rather than better operations (3M has not published the full-year figure). Honeywell's raise came with a higher growth forecast; 3M's came mostly from changes in what is counted.

What to watch next

• Honeywell: whether Process Automation's margin starts recovering from 22.2% as Johnson Matthey is absorbed; whether the 5%–6% Q4 organic guide holds while utilities keep deferring meter installations (Industrial Automation's products were flat); and, from next year, whether the businesses themselves can lift margins once the overhead saving is in the base. The 10-Q also discloses a formal SEC investigation into "certain financial reporting matters," which the company does not expect to be material.
• 3M: whether consumer-electronics and auto demand stabilizes in Transportation and Electronics; whether Safety and Industrial holds a margin near 30%; whether Q4 organic growth reaches the roughly 4% the full-year goal requires; and the size of the public water supplier PFAS settlement payments now that testing results are in, which will drive its cash flow more than any operating trend.

Sources: figures are from our published analyses, Honeywell Q3 2026 (from Honeywell's Form 10-Q and same-day earnings release) and 3M Q3 2026 (from 3M's Form 10-Q), at https://financialreportinsights.com/companies/hon/2026/q3 and https://financialreportinsights.com/companies/mmm/2026/q3 .