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3M's (MMM) October Sales Increase Y/Y in Low-Single Digits

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Zacks Equity Research
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3M Company MMM provided details on its sales performance for October 2020. Revenues in the month reportedly increased 3% from the year-ago quarter as business across geographies and segments, except for Transportation and Electronics segment, improved. Notably, the company expected flat to low-single-digit growth in sales for October.

Its shares gained 1.6% on Friday, closing the trading session at $169.79.

Details on Monthly Sales Update

As noted, the company’s sales in October totaled $2.9 billion. Organically, its sales improved 2% year over year, while acquisitions/divestitures positively influenced the quarterly performance by 1%. The impact of the movements in foreign currencies was flat compared with the year-ago quarter.

On a geographical basis, sales in the Americas increased 2%, both on a reported and organic basis, from the year-ago quarter. Notably, local-currency organic sales expanded 3% in the United States. Further, Europe, Middle East and Africa’s sales increased 2% year over year or 1% organically.

Sales in the Asia Pacific were up 3% than the year-ago month or increased 1% organically. Notably, organic sales (local currency) in China grew 13%, while were down 4% in Japan.

On a segmental basis, sales increased 4% year over year in Safety and Industrial, 7% in Consumer, and 12% in Health Care. However, Transportation and Electronics’ sales decreased 4% year over year. On an organic local-currency basis, sales were up 4% in Safety and Industrial, 8% in Consumer, and 8% in Health Care, while were down 4% in Transportation and Electronics.

For the fourth quarter of 2020, 3M anticipates a healthy demand for respirations due to the pandemic to boost sales by 300 basis points (bps) year over year. Also, it believes that business days will not impact year-over-year results. However, headwinds to the tune of $100 million (or 130 bps) related to the divestiture of the drug delivery business to an affiliate of Altaris Capital Partners in May 2020 is predicted to impact sales in the quarter.

The Zacks Consensus Estimate for 3M’s fourth-quarter revenues is pegged at $8.3 billion, suggesting an increase of 1.7% from the year-ago reported number.

Zacks Rank, Price Performance and Earnings Estimates Trend

With $97.9 billion worth market capitalization, 3M currently carries a Zacks Rank #2 (Buy). Solid product offerings, the pandemic-induced demand for respirators, inorganic actions and shareholder-friendly policies are anticipated to prove beneficial for 3M. However, the lingering impacts of the challenges related to the pandemic are still concerning.

In the past three months, 3M’s shares have gained 3.1% compared with the industry’s growth of 17.5%.

In the past 60 days, the Zacks Consensus Estimate for the company’s earnings is pegged at $8.57 for 2020 and $9.36 for 2021, reflecting growth of 3.9% and 4.7% from the respective 60-day-ago figures. Also, the consensus estimate for the fourth quarter has been raised by 2.3% to $2.26.    

3M Company Price and Consensus


3M Company Price and Consensus
3M Company Price and Consensus

3M Company price-consensus-chart | 3M Company Quote

Other Stocks to Consider

Some other top-ranked stocks in the industry are Crane Co. CR, Danaher Corporation DHR and ITT Inc. ITT. All these companies presently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Current-year earnings estimates for the companies have improved in the past 60 days. Further, the earnings surprise in the last reported quarter was 28.05% for Crane, 25.55% for Danaher and 15.49% for ITT.

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