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3M (MMM) Gains But Lags Market: What You Should Know

Zacks Equity Research
Exponent (EXPO) delivered earnings and revenue surprises of 18.18% and 6.39%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

3M (MMM) closed the most recent trading day at $166.77, moving +0.05% from the previous trading session. This change lagged the S&P 500's 0.09% gain on the day. At the same time, the Dow added 0.09%, and the tech-heavy Nasdaq gained 0.62%.

Coming into today, shares of the maker of Post-it notes, industrial coatings and ceramics had lost 2.98% in the past month. In that same time, the Conglomerates sector lost 0.35%, while the S&P 500 gained 2.08%.

Investors will be hoping for strength from MMM as it approaches its next earnings release. The company is expected to report EPS of $2.04, down 21.24% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $8.04 billion, down 4.18% from the year-ago period.

MMM's full-year Zacks Consensus Estimates are calling for earnings of $9.31 per share and revenue of $32.24 billion. These results would represent year-over-year changes of -10.99% and -1.6%, respectively.

Any recent changes to analyst estimates for MMM should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 1.45% 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 17.9 right now. Its industry sports an average Forward P/E of 16.49, so we one might conclude that MMM is trading at a premium comparatively.

It is also worth noting that MMM currently has a PEG ratio of 1.76. 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. The Diversified Operations industry currently had an average PEG ratio of 1.79 as of yesterday's close.

The Diversified Operations industry is part of the Conglomerates sector. This industry currently has a Zacks Industry Rank of 112, which puts it in the top 44% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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