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3M Company & Holmes Group Collaborate on Roof Protection

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3M Company & Holmes Group Collaborate on Roof Protection

3M's (MMM) diversified product portfolio and the ability to penetrate in different markets have been its forte. However, rising cost of sales remains a major cause of concern.

Shingles featuring 3M Company’s MMM Scotchgard Protector has been recognised as a HOLMES approved product by The Holmes Group. The move is likely to increase awareness among homeowners and assist them to fight black streaks on roofs. The inclusion of Scotchgard Protector in the HOLMES approved product list will boost the reliability of the products’ quality and durability in the market.

Notably, 3M’s copper-containing roofing granules provide a long-lasting roof protection against black streaks caused by algae growth. Available as shingles with Scotchgard Protector, the solution has come up with at least 10% copper containing granules spread evenly across the surface of shingle.

Existing Business Scenario

Although, 3M's diversified product portfolio and the ability to penetrate in different markets have been its forte, rising cost of sales posed a major cause of concern for the company over the past few quarters. As a matter of fact, its cost of sales escalated 9.1% and 5.1% in first and second quarter of 2018, respectively. High retirement benefit cost, interest expenses and inflation in the prices of major inputs primarily led to the rise. The company perceives that material inflation will linger in the last two quarters of 2018 as well.

In the past six months, the Zacks Rank #4 (Sell) stock has lost 9.5%, wider than the industry’s decline of 0.3%.

Also, the company faces tremendous local competitive pressure in almost all of its operating regions. In order to hedge the competitive pressure, it has to invest significantly in R&D to locally develop and manufacture new products. This is anticipated to put pressure on the company’s finances and hence might impact its profitability, moving ahead.

Further, given 3M’s international presence, it remains exposed to risks associated with adverse changes in foreign currency exchange rates, interest rates and commodity prices.

Stocks to Consider

Some better-ranked stocks from the same space are Federal Signal Corporation FSS, Carlisle Companies Incorporated CSL and Crane Company CR. While Federal Signal sports a Zacks Rank #1 (Strong Buy), Carlisle and Crane carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Federal Signal surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 22.48%.

Carlisle surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 12.85%.

Crane outpaced estimates in each of the preceding four quarters with an average earnings surprise of 3.03%.

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Crane Company (CR) : Free Stock Analysis Report
 
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3M Company (MMM) : Free Stock Analysis Report
 
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