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3M (MMM) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, 3M (MMM) closed at $162.98, marking a +1.54% move from the previous day. This change outpaced the S&P 500's 1% gain on the day.

Heading into today, shares of the maker of Post-it notes, industrial coatings and ceramics had lost 5.4% over the past month, lagging the Conglomerates sector's loss of 3.51% and the S&P 500's loss of 1.22% in that time.

Wall Street will be looking for positivity from MMM as it approaches its next earnings report date. This is expected to be October 24, 2019. On that day, MMM is projected to report earnings of $2.52 per share, which would represent a year-over-year decline of 2.33%. Meanwhile, our latest consensus estimate is calling for revenue of $8.10 billion, down 0.66% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.18 per share and revenue of $32.06 billion, which would represent changes of -12.24% and -2.14%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for MMM. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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 0.8% lower. MMM currently has a Zacks Rank of #4 (Sell).

Valuation is also important, so investors should note that MMM has a Forward P/E ratio of 17.49 right now. This represents a premium compared to its industry's average Forward P/E of 14.37.

It is also worth noting that MMM currently has a PEG ratio of 1.84. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MMM's industry had an average PEG ratio of 1.69 as of yesterday's close.

The Diversified Operations industry is part of the Conglomerates sector. This industry currently has a Zacks Industry Rank of 165, which puts it in the bottom 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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