What To Anticipate From 3M’s Q3?

3M (NYSE: MMM) will report its Q3 2024 outcomes on Tuesday, October 22. We count on the corporate to put up combined outcomes, with income of $6.12 billion and earnings of $1.88 per share, in comparison with the consensus estimates of $6.06 billion and $1.90, respectively. 3M has been going through headwinds amid a weak demand setting, and it’s anticipated to weigh on its gross sales in Q3. Our dashboard on 3M’s FY 2024Q3 Earnings Preview has extra particulars on the corporate’s revenues and earnings for the quarter.

What Tendencies Will Drive 3M’s outcomes?

3M’s gross sales progress has been tepid currently as a result of provide chain disruptions, excessive inflation, a strengthening greenback, and slowing financial progress. 3M’s shopper enterprise has additionally been going through headwinds amid decrease automotive aftermarket, residence enchancment, auto-care, and packaging gross sales. With a weak shopper sentiment, we expect that 3M will doubtless see a low single-digit decline in gross sales to round $6.1 billion in Q3. Though the corporate’s prior-year quarter gross sales stood at $8.3 billion, it included $2.1 billion in Well being Care gross sales. 3M on April 1, 2024, accomplished the deliberate spin-off of its well being care enterprise, which is now an unbiased firm — Solventum – and is listed on the NYSE as SOLV.  3M now has solely three segments – Security & Industrial, Transportation & Electronics, and Client. 3M has seen its profitability enhance currently, a development anticipated to proceed within the close to time period. With a slight decline in gross sales and margin growth, we count on it to report adjusted earnings of $1.88 per share.

How Did 3M Fare In Q2?

3M’s revenue of $6.3 billion (reported) in Q2 was down 0.5% y-o-y. Transportation and Electronics section gross sales had been down 2.2%, Security & Industrial income was down 0.2%, and the Client section noticed a 2.4% decline in gross sales. 3M noticed its adjusted EBITDA broaden by 430 bps y-o-y to 26.2% in Q2. This led to a strong 39% y-o-y rise within the backside line to $1.93 on an adjusted foundation. 3M expects its full-year natural gross sales to rise as a lot as 2%, and its adjusted earnings per share to be within the vary of $7.00 and $7.30, larger than its prior estimate of $6.80 and $7.30.

What Does This Imply For MMM Inventory?

MMM inventory has outperformed the broader markets, with a 52% rise this yr, in comparison with 22% beneficial properties for the S&P 500 index. This outperformance can partly be attributed to the spin-off of its well being care enterprise, which is able to assist the corporate in streamlining its operations. Nonetheless, if we take a look at a barely long run, MMM inventory has carried out worse than the broader market in every of the final three years. In distinction, the Trefis Excessive High quality (HQ) Portfolio, with a group of 30 shares, is much less unstable, and it has outperformed the S&P 500 annually over the identical interval. Why is that? As a bunch, HQ Portfolio shares offered higher returns with much less threat versus the benchmark index; much less of a roller-coaster trip, as evident in HQ Portfolio efficiency metrics.

We estimate 3M’s valuation to be $117 per share, about 13% under its present value of $135. At its present ranges, MMM inventory is buying and selling at 19x ahead anticipated earnings of $7.21 in 2024. The 19x determine is larger than the inventory’s common P/E ratio of 15x over the past three years.

Whereas 3M inventory appears like it’s barely overvalued, try how 3M Friends fare on metrics that matter. You can see different helpful comparisons for corporations throughout industries at Peer Comparisons.