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3M Offers 2014 Outlook, Ups Dividend

Zacks Equity Research

Diversified technology company 3M Company (MMM) recently updated its five-year plan and provided its 2014 outlook. 3M continues to deliver sustainable increases in sales, earnings and free cash flow, benefiting from its long-term strategy of accelerating investment in higher growth programs. Going forward, 3M expects 9% to 11% growth in earnings per share, 4% to 6% organic revenue growth, 20% return on invested capital and approximately 100% free cash flow conversion in the period from 2013 -2017

Despite a challenging macroeconomic environment, 3M expects earnings in 2014 to be in the range of $7.30 to $7.55 per share with organic local currency sales growth of 3% to 6%. The company expects that free cash flow conversion will be in the range of 90% to 100%. The company remains focused on inventing new products as it enjoys a competitive advantage worldwide.

3M also increased its quarterly dividend by 35% for the first quarter of 2014. The company expects its 2013-2017 share repurchases to be in the range of $17 billion to $22 billion, up from its previous guidance of $7.5 billion to $15 billion. The company expects to further leverage its balance sheet and aims to provide increasing returns to shareholders.

Portfolio management, investment in innovation and business transformation are the three key levers on which the company intends to focus moving forward. 3M will also continue to invest in capital expenditures and research and development to support organic growth as it aims a capital structure strategy and increased capital deployment. 3M expects to invest between $5 billion and $10 billion for acquisitions through 2017.

3M, together with its subsidiaries, operates as a diversified technology company with manufacturing operations spread over 70 countries. The company aims to deliver innovative security solutions to businesses and governments worldwide, thus maintaining the security of people and documents.

3M currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include ITT Corp. (ITT), Hutchison Whampoa Ltd (HUWHY) and Raven Industries Inc. (RAVN). All these stocks carry a Zacks Rank #2 (Buy).

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