From Nasdaq:

3M (NYSE: MMM) reported Q4’23 revenues and earnings that beat street estimates. Company revenue was $8.0 billion and earnings were $2.42 per share and adjusted, compared to the consensus estimates of $7.7 billion and $2.31. MMM has underperformed the S&P 500 in the last three years, with a 50% stock decline from $175 in 2021 to around $90 now.

3M is restructuring and in the process of separating its healthcare business as a separate company. This will help the company raise money to settle lawsuits. The company also expects sales to grow between 0.25% and 2.25% and earnings to be in the range of $9.35 and $9.75 in 2024. The company also expects operating margin to expand going forward.

MMM stock has declined 50% from around $175 in early January 2021 to around $90 now and underperformed the S&P 500 in each of the last three years. In contrast, the Trefis High Quality Portfolio of 30 stocks has outperformed S&P 500 each year over the same period, indicating the stock has ample room for growth.

There are near-term risks associated with 3M stock, such as challenging macroeconomic factors, falling sales, weak consumer demand, and a potential recession that could impact the company’s business. However, some of these concerns have already been priced in, with the stock trading at less than 10x forward earnings compared to the 12x average over the last two years.

The average P/E multiple over the last five years is around 16x, and 3M has spent $15 billion to settle litigation in 2023. While there are risks associated with 3M stock, we believe that some of these have already been priced in, and there is a bright long-term outlook for 3M stock.

Despite declining stock performance in recent years, we think 3M has ample room for growth. The company is in the process of separating its healthcare business as a separate company and is estimated to have a valuation of $111 per share, reflecting a 20% upside from its current level of around $90. If initiatives are successful, 3M is likely to emerge with better margins and earnings growth from 2025.

The Trefis High Quality Portfolio has outperformed the S&P 500 each year over the past several years, indicating solid growth prospects for 3M in the long run.



Read more: What’s Next For 3M Stock After A 15% Fall This Year?