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Can Weak End Markets, Forex Woes Hurt 3M (MMM) in 3Q Earnings?

Zacks Equity Research

3M Company MMM is scheduled to release third-quarter 2019 results on Oct 24, before the market opens.

The company delivered better-than-expected results in two of the last four quarters while lagged estimates twice. Average earnings surprise was a negative 1.41%. In the last reported quarter, its earnings of $2.20 surpassed the Zacks Consensus Estimate of $2.04.

In the past three months, 3M’s shares have moved down 6.5% compared with the industry’s decline of 5%.





Let us see how things are shaping up for 3M this quarter.

Factors to Affect Q3 Results

Weakness in automotive and electronics end markets negatively impacted the company’s organic sales performance in the second quarter. This trend is expected to have continued in the third quarter as well and adversely impacted top-line numbers. Also, third-quarter results are expected to reflect soft China operations and an impact of divestitures.

Unfavorable movements in foreign currencies are anticipated to have negatively impacted the company’s third-quarter revenues while high raw material costs, restructuring expenses and high debt levels are expected to get reflected in corporate margins.

3M’s bottom line is expected to reflect the aforementioned headwinds along with high tax rates in the to-be-reported quarter.

The growing polarity of products (Nexcare, Post-it, Scotch, Scotch-Brite and Scotchgard), focus on innovation, acquisitions (including M*Modal in February 2019), effective pricing actions and cost-reduction efforts are expected to have aided the company’s performance in the third quarter.

The Zack Consensus Estimate for 3M’s earnings per share indicates a 4.3% decline from the year-ago reported figure. However, the estimate for revenues of $8,098 million suggests a 0.7% decline from the year-ago quarter’s reported number.

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for iRobot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: iRobot has an Earnings ESP of -0.85% as the Most Accurate Estimate of $2.45 is below the Zacks Consensus Estimate of $2.47.

3M Company Price, Consensus and EPS Surprise

 

3M Company Price, Consensus and EPS Surprise

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

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some companies that you may want to consider as according to our model, these have the right combination of elements to post an earnings beat this quarter:

Plug Power, Inc PLUG presently has an Earnings ESP of +58.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sealed Air Corporation SEE currently has an Earnings ESP of +2.40% and a Zacks Rank #3.

Welbeit, Inc WBT has an Earnings ESP of +1.01% and a Zacks Rank #3 at present.

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