Stock (Symbol) |
3M (MMM) |
Stock Price |
$158 |
Sector |
| Food & Necessities |
Data is as of |
| December 7, 2015 |
Expected to Report |
| Jan 25 – Jan 29 |
Company Description |
 3M Company operates in five business segments: Industrial, which serves a range of markets, such as automotive original equipment manufacturer (OEM) and automotive aftermarket, electronics, appliance, paper and printing, packaging, food and beverage, and construction; Safety and Graphics, which serves a range of markets for the safety, security and productivity of people, facilities and systems; Electronics and Energy, which serves customers in electronics and energy markets, including solutions for electronic devices, telecommunications networks, electrical products, power generation and distribution, and infrastructure protection; Health Care – markets that include medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, and health information systems, and Consumer, which serves markets that include consumer retail, office retail, home improvement, building maintenance and other markets. Source: Thomson Financial |
Sharek’s Take |
 Like many multinationals, 3M (MMM) can’t grow with this strong US dollar. Last qtr MMM had 9% profit growth on 1% sales growth, which was helped by big stock buybacks. Wait…after foreign exchange it was just 4% profit growth as sales declined 5% . In 2014 3M had $32 billion in sales, with $20 billion coming outside the US. Known for Post-It notes, Minnesota Mining and Manufacturing got its roots in selling sandpaper, and made its first sale in $1906 for $2 — four years after the company was founded. In 1925 Scotch tape was invented, Scotchgard was first sold in 1956, and Thinsulate thermal insulation was introduced in 1979. It 1980 the yellow Post-It note came to market. This is a quality conservative stock that is a solid selection for retires. It pays a 2.6% dividend which its increased 57 consecutive years. For the qtr the company spent $2 billion to stock buybacks and dividends, compared to a $96 billion market cap. But 3M is facing huge F/X headwinds, that won’t be going away soon, and that could keep the stock in check for years. And at 19x earnings the stock’s not even on sale. I’m waiting to buy MMM for conservative investors at a better price. |
One Year Chart |
 Profit growth was 12% 4QtrsAgo, and 11% in 2014. Those were the days. Now MMM is putting out mid-single digit growth, with negative growth expected next qtr. Still, the stock isn’t down in the last year. And the P/E of 19 seems a tad high for the growth you’re getting. Qtrly profit growth looks to pick up to 9% the first 3 qtrs of 2016, but these estimates have been declining — especially closer to the announcement date. |
Fair Value |
 MMM currently sells for 19x 2016 earnings estimates. Notice from 2008 through 2012 the company had a median P/E of 14. So the stock’s a lot more expensive now. I’m not going to buy MMM at this price. |
Bottom Line |
 For the decade, MMM has given investors a 132% total return, as the stock’s gone from $78 to $158 and management paid out $22 in dividends.3M is a good long-term holding for conservative accounts, assuming you are in at a lower level. MMM has Value Line’s top rating for safety, has a yield of 2.6% and has increased its dividend 57 years straight. But foreign exchange is just killing these multinationals and it could be years before those affected stocks move higher. That’s a big statement. MMM is on my radar for the Conservative Growth Portfolio. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
