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3M Company (MMM) to Post Q3 Earnings: Is a Beat in Store?

Zacks Equity Research
·5 min read

3M Company MMM is scheduled to release third-quarter 2020 results on Oct 27, before market open.

The company delivered better-than-expected results in three of the last four quarters, while lagged estimates once. Earnings surprise for the period was 1.20%, on average. In the last reported quarter, its earnings of $1.78 per share surpassed the Zacks Consensus Estimate of $1.77.

In the past three months, 3M Company’s shares have gained 6.8% compared with the industry’s growth of 11.8%.




 

Let us delve deeper.

Key Factors and Estimates for Q3

3M’s diversified product offerings, zeal to develop products and constant efforts to upscale shareholders’ returns have been adding to its attractiveness over time. This trend is likely to have benefited the company in the third quarter as well. Synergistic gains from acquired assets — with a 3% positive impact each on sales in both July and August — are also likely to have proved advantageous. Also, a healthy generation of free cash flow is anticipated to have aided.

Healthy demand for products related to home improvement, personal safety, biopharma filtration, general cleaning, respirators and others is expected to have aided third-quarter performance.

It is worth mentioning here that 3M seems to have shown resiliency to the adversities caused by the pandemic in the third quarter. This is quite evident from sales growth of 6% recorded in July and 2% in August. Notably, the company’s sales were down 12.2% year over year in the second quarter of 2020. Also, businesses in the Americas, and Europe, Middle East and Africa have flourished in the first two months of the third quarter.

On a segmental basis, the company recorded year-over-year growth in sales in the Safety and Industrial, Consumer, and Health Care segments in both July and August. However, sales in the Transportation and Electronics segment were down year over year in both months. These monthly trends are expected to get reflected on sales for the third quarter as well.

3M anticipated third-quarter sales of $8.2-$8.3 billion, suggesting an increase from the year-ago reported number of $8 billion and the sequential figure of $7.2 billion. The Zacks Consensus Estimate for third-quarter revenues is pegged at $8,331 million, indicating a year-over-year increase of 4.3% and sequential growth of 16.1%.

On a segmental basis, the Zacks Consensus Estimate for Safety and Industrial’s sales, pegged at $3,080 million, suggests year-over-year and sequential growth of 8.1% and 15.4%, respectively. Likewise, the estimate of $2,142 million for Healthcare indicates toward growth of 24.5% and 17.4% from the respective year-ago and sequentially reported numbers. For Consumer, the estimate of $1,378 million suggests a rise of 4.1% from the year-ago reported number and 11.3% from the sequential reported number. Transportation and Electronics’ consensus estimate, pegged at $2,361 million, suggest a year-over-year decline of 5.7% and a sequential increase of 21.9%.

On the flip side, the lingering impacts of the pandemic-related headwinds, and those related to international exposure and high debts are expected to have ailed. Cost-saving actions might have helped. The Zack Consensus Estimate for 3M’s third-quarter earnings is pegged at $2.25, suggesting a year-over-year decline of 12.8% and sequential growth of 26.4%.

Earnings Whispers

Our proven model suggests an earnings beat for 3M Company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: 3M Company has an Earnings ESP of +1.74% as the Most Accurate Estimate of $2.29 is above the Zacks Consensus Estimate of $2.25.

Zacks Rank: The company currently carries a Zacks Rank #2.

Other Stocks to Consider

Here are some other companies that you may want to consider as according to our model, these too have the right combination of elements to post an earnings beat this quarter:

AGCO Corporation AGCO currently has an Earnings ESP of +6.07% and it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

ITT Inc. ITT has an Earnings ESP of +2.28% and a Zacks Rank #1 at present.

General Electric Company GE presently has an Earnings ESP of +46.67% and a Zacks Rank #3.

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