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Compare Stocks › HON vs PEP

Honeywell International Inc. (HON) vs PepsiCo, Inc. (PEP): Which Is the Better Buy in 2026?

As of 2026-06-19, HON is overvalued at $229, with a DCF intrinsic value of $145 and a margin of safety of -58%. PEP is overvalued at $142, with an intrinsic value of $82 and a margin of safety of -74%. Of the two, HON has the wider margin of safety.

HON
Honeywell International Inc.
$229.01
VS
PEP
PepsiCo, Inc.
$142.02

Rewards

HON
  • ★Honeywell International Inc. has maintained ROIC above 10% for 4 consecutive years, suggesting solid business economics.
  • ★Honeywell International Inc. scores 85/100 on the Economic Moat Score (Wide Moat), with margin stability as the strongest competitive dimension.
  • ★Return on equity has consistently exceeded 20% over 4 years, indicating efficient use of shareholder capital.
PEP
  • ★PepsiCo, Inc. has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
  • ★PepsiCo, Inc. scores 88/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
  • ★Free cash flow has grown at a 11.0% CAGR over the past 4 years, demonstrating strong earnings power growth.

Risks

HON
  • ⚠Trailing P/E of 36.5x is 47% above the historical average of 24.8x — the stock trades at a premium to its own history.
  • ⚠PEG ratio of 2.10 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
  • ⚠High leverage (1.73x net debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.
PEP
  • ⚠High leverage (1.95x net debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.

Key Valuation Metrics

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HON
PEP
Valuation
$5.42B
Free Cash Flow
$8.75B
3.74%
FCF Yield
4.51%
36.52
Trailing P/E
22.30
20.01
Forward P/E
15.59
Quality & Moat
11.92%
ROIC
17.22%
24.26%
ROE
43.88%
36.93%
Gross Margin
54.38%
2.10
PEG Ratio
1.57
Balance Sheet Safety
1.73
Net Debt / Equity
1.95
N/A
Interest Coverage
N/A
2.97
Net Debt / EBITDA
2.24
2.07%
Dividend Yield
4.02%
HON: 1Ties: 1PEP: 10
HONPEP

Historical Fundamentals

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HON

Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

PEP

Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

$1 Retained Earnings Test

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HON
$-1.48
created per $1 retained over 3 years
Market Cap Declined
Σ Retained
$7.36B
Δ Market Cap
$-10.90B
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
PEP
$-9.83
created per $1 retained over 3 years
Market Cap Declined
Σ Retained
$5.34B
Δ Market Cap
$-52.53B
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

Discounted Cash Flow (DCF) Analysis

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HON
57.9% Overvalued
Price is 57.9% above estimated fair value
Current Price: $229.01
Fair Value: $145.05
Strongly undervalued
Undervalued
Fairly valued
Overvalued
Strongly overvalued
PEP
73.7% Overvalued
Price is 73.7% above estimated fair value
Current Price: $142.02
Fair Value: $81.78
Strongly undervalued
Undervalued
Fairly valued
Overvalued
Strongly overvalued

Reverse DCF — Market-Implied Growth

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HON

What growth rate is the market pricing in at $229?

+14.6%
Market-Implied Owner Earnings Growth
Standard FCF implies +13.9%

The market implies +14.6% Owner Earnings growth, above historical trends.

Standard FCF implies a demanding +13.9%, reflecting heavy growth investment.

PEP

What growth rate is the market pricing in at $142?

+12.6%
Market-Implied Owner Earnings Growth
Standard FCF implies +11.8%

The market implies +12.6% Owner Earnings growth, above historical trends.

Standard FCF implies a demanding +11.8%, reflecting heavy growth investment.

Economic Moat Score

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HON
85/100
Wide Moat
70+ Wide · 40-69 Narrow · <40 None

Wide moat with strength across all dimensions. Margin Stability is the standout factor.

Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.
PEP
88/100
Wide Moat
70+ Wide · 40-69 Narrow · <40 None

Wide moat with strength across all dimensions. Revenue Predictability is the standout factor.

Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.

Forensic Accounting

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HON
-2.60
Unlikely Manipulator
Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

M-Score Trend

Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
PEP
-2.57
Unlikely Manipulator
Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

M-Score Trend

Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

Ownership Breakdown

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HON
Insiders 0.1%Institutions 81.8%Retail & Other 18.1%
No. of Institutional Holders3,433
High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.
PEP
Insiders 0.2%Institutions 80.9%Retail & Other 18.9%
No. of Institutional Holders4,456
High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.

High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.

Insider Buying Activity

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HON
0
Buys (3M)
0
Buys (12M)
No open market insider purchases found.
Open market purchases · includes direct & indirect ownership · excludes option exercises
PEP
0
Buys (3M)
0
Buys (12M)
No open market insider purchases found.
Open market purchases · includes direct & indirect ownership · excludes option exercises

Open market purchases · includes direct & indirect ownership · excludes option exercises.

Insider Selling Activity

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HON
0
Sells (3M)
8
Sells (12M)
Total value (12M): $16.52M
WEST KENNETH J
Officer
$211,877
@ $242.70 · 2026-03-02
CURRIER JAMES E
Officer
$547,725
@ $243.65 · 2026-03-02
LIEBLEIN GRACE D
Director
$1.43M
@ $243.73 · 2026-02-23
DAVIS D. SCOTT
Director
$568,080
@ $240.00 · 2026-02-19
MAILLOUX ROBERT D
Officer
$1.26M
@ $239.00 · 2026-02-06
MAILLOUX ROBERT D
Officer
$2.42M
@ $229.00 · 2026-01-30
BOLDEA LUCIAN
Officer
$9.34M
@ $221.58 · 2025-08-27
WEST KENNETH J
Officer
$752,026
@ $218.10 · 2025-08-01
MADDEN ANNE T
General Counsel
$6.00M
@ $207.89 · 2025-02-10
Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives
PEP
0
Sells (3M)
1
Sells (12M)
Total value (12M): $4.68M
LAGUARTA RAMON L
Chief Executive Officer
$4.68M
@ $167.39 · 2026-03-02
GALLAGHER MARIE T
Officer
$3.99M
@ $159.55 · 2025-03-04
KRISHNAN RAMKUMAR
Chief Executive Officer
$1.50M
@ $150.97 · 2025-03-03
WILLIAMS STEVEN C
Officer
$2.71M
@ $150.89 · 2025-03-03
FLAVELL DAVID JAMES
General Counsel
$1.04M
@ $150.90 · 2025-03-03
LAGUARTA RAMON L
Chief Executive Officer
$7.74M
@ $154.90 · 2025-03-03
SANTILLI PAULA ALEJANDRA
Officer
$1.18M
@ $151.89 · 2025-02-27
Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives

Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.

🎭 Mr. Market's Mood

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HON
FearGreed
😐Neutral(55/100)

"Market is pricing this stock without strong emotion in either direction"

Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
PEP
FearGreed
😐Neutral(48/100)

"Market is pricing this stock without strong emotion in either direction"

Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

⚖️ Buffett Signal

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HON
⚪Awaiting DCF Data

The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

DCF Margin of Safety: N/AMr. Market's Mood: Neutral (55)
PEP
⚪Awaiting DCF Data

The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

DCF Margin of Safety: N/AMr. Market's Mood: Neutral (48)
View HON Full AnalysisView PEP Full Analysis

Frequently Asked Questions: HON vs PEP

Is Honeywell International Inc. or PepsiCo, Inc. more undervalued in 2026?▼

Based on our discounted cash flow model, HON trades at a -57.9% margin of safety (intrinsic value $145 vs. price $229), compared to PEP's -73.7% margin of safety (intrinsic $82 vs. $142).

Which stock has a wider economic moat, Honeywell International Inc. or PepsiCo, Inc.?▼

PEP scores 88/100 (Wide moat), while HON scores 85/100 (Wide moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.

Which company has better free cash flow, Honeywell International Inc. or PepsiCo, Inc.?▼

PepsiCo, Inc. (PEP) generates a 4.5% free cash flow yield, compared to Honeywell International Inc.'s 3.7%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.

Which stock has higher return on invested capital, Honeywell International Inc. or PepsiCo, Inc.?▼

PEP earns 17.2% ROIC versus HON's 11.9%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.

Which dividend is safer, Honeywell International Inc.'s or PepsiCo, Inc.'s?▼

HON's dividend earns a safety score of 84/100 (Very Safe), compared to PEP's 34/100 (Unsafe). HON has raised its dividend for 3 consecutive years.