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3M (MMM) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
Luther Burbank (LBC) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

3M (MMM) closed the most recent trading day at $161.37, moving -1.21% from the previous trading session. This change lagged the S&P 500's daily loss of 0.69%. Elsewhere, the Dow lost 0.87%, while the tech-heavy Nasdaq lost 0.79%.

Prior to today's trading, shares of the maker of Post-it notes, industrial coatings and ceramics had lost 13.8% over the past month. This has lagged the Conglomerates sector's loss of 5.79% and the S&P 500's loss of 4.53% in that time.

MMM will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.04, down 21.24% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $8.04 billion, down 4.18% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.38 per share and revenue of $32.24 billion. These totals would mark changes of -10.33% and -1.6%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for MMM. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 1.48% lower. MMM is holding a Zacks Rank of #4 (Sell) right now.

Valuation is also important, so investors should note that MMM has a Forward P/E ratio of 17.42 right now. Its industry sports an average Forward P/E of 15.81, so we one might conclude that MMM is trading at a premium comparatively.

Investors should also note that MMM has a PEG ratio of 1.71 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. MMM's industry had an average PEG ratio of 1.78 as of yesterday's close.

The Diversified Operations industry is part of the Conglomerates sector. This industry currently has a Zacks Industry Rank of 75, which puts it in the top 30% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow MMM in the coming trading sessions, be sure to utilize Zacks.com.


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