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3M (MMM) Beats Q3 Earnings on Organic Growth, Guides Up
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Driven by broad-based organic growth across all segments and geographies, 3M Company (MMM - Free Report) reported strong third-quarter 2017 results with healthy year-over-year increase in earnings and revenues. GAAP earnings for the reported quarter were $1,429 million or $2.33 per share compared with $1,329 million or $2.15 per share in the year-earlier quarter.
The year-over-year improvement in earnings was largely due to higher sales. The reported earnings comfortably beat the Zacks Consensus Estimate of $2.21.
Net sales were record high for third quarter at $8,172 million, up from $7,709 million in the year-ago quarter, and exceeded the Zacks Consensus Estimate of $7,908 million. Foreign currency translation impact increased sales by 0.6%, while organic local-currency sales improved 6.6%.
On a geographic basis, total sales increased 10.8% in Asia Pacific, 5.6% in Latin America/Canada, 2% in the U.S and 7.4% in EMEA (Europe, Middle East and Africa). From a segment perspective, total sales increased 13.1% in Electronics and Energy, 7.7% in Health Care, 6.2% in Industrial, 2.2% in Consumer, and 1.9% in Safety and Graphics. Operating income in the reported quarter increased to $2,041 million from $1,904 million in the year-ago-quarter, resulting in respective operating margins of 25% and 24.7%.
Industrial segment sales increased 6.2% year over year to $2,764 million with improvement in all regions, driven by higher sales of advanced materials, automotive and aerospace solutions, industrial adhesives and tapes, and separation and purification sciences products. Operating income increased 3.1% year over year to $614 million for operating margin of 22.2%.
Health Care segment sales improved 7.7% to $1,476 million in the reported quarter, driven by higher sales in drug delivery systems, food safety, and medical consumables. Operating income increased 9.3% year over year to $471 million for operating margin of 31.9%.
Consumer segment revenues were $1,236 million, up 2.2% year over year, driven by higher sales in home improvement, home care and consumer health care. Operating income was $307 million, down 3.2% year over year for operating margin of 24.8%.
Safety and Graphics segment sales increased 1.9% year over year to $1,529 million, owing to higher sales in roofing granules and transportation safety. Operating income increased 10.5% year over year to $410 million for operating margin of 26.8%.
Electronics and Energy segment revenues were $1,414 million, up 13.1% year over year due to growth in electronics material solutions and display materials and systems. Operating income was up 29.9% year over year to $394 million for operating margin of 27.9%.
Balance Sheet and Cash Flow
Cash and cash equivalents at quarter end were $2,831 million, while long-term debt stood at $10,828 million. Cash flow from operating activities for the reported quarter was $1,750 million compared with $1,908 million in the year-ago period, bringing the respective tallies for the first nine months of the year to $4,380 million and $4,453 million. Free cash flow generated for the quarter was $1,425 million, up from $1,561 million in the prior-year period.
During the reported quarter, 3M paid $701 million in cash dividends and repurchased $380 million worth of shares.
Guidance Raised
Buoyed by strong quarterly results and favorable growth dynamics, 3M raised its earlier guidance for 2017. The company anticipates 2017 GAAP earnings in the range of $9.00 to $9.10 per share, up from prior projections of $8.80–$9.05. This represents year-over-year growth of 10–12%, up from 8–11% expected earlier. Organic local-currency sales are expected to be 4–5%, up from 3–5% expected earlier.
Danaher has a long-term earnings growth expectation of 11.7%. It has beaten earnings estimates in each of the trailing four quarters with an average positive surprise of 2.6%.
Honeywell has a long-term earnings growth expectation of 9.4%. It has beaten earnings estimates thrice in each of the trailing four quarters with an average positive surprise of 2.1%.
Leucadia has a long-term earnings growth expectation of 18%. It has beaten earnings estimates twice in the trailing four quarters with an average positive surprise of 5.4%.
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It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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3M (MMM) Beats Q3 Earnings on Organic Growth, Guides Up
Driven by broad-based organic growth across all segments and geographies, 3M Company (MMM - Free Report) reported strong third-quarter 2017 results with healthy year-over-year increase in earnings and revenues. GAAP earnings for the reported quarter were $1,429 million or $2.33 per share compared with $1,329 million or $2.15 per share in the year-earlier quarter.
The year-over-year improvement in earnings was largely due to higher sales. The reported earnings comfortably beat the Zacks Consensus Estimate of $2.21.
Net sales were record high for third quarter at $8,172 million, up from $7,709 million in the year-ago quarter, and exceeded the Zacks Consensus Estimate of $7,908 million. Foreign currency translation impact increased sales by 0.6%, while organic local-currency sales improved 6.6%.
On a geographic basis, total sales increased 10.8% in Asia Pacific, 5.6% in Latin America/Canada, 2% in the U.S and 7.4% in EMEA (Europe, Middle East and Africa). From a segment perspective, total sales increased 13.1% in Electronics and Energy, 7.7% in Health Care, 6.2% in Industrial, 2.2% in Consumer, and 1.9% in Safety and Graphics. Operating income in the reported quarter increased to $2,041 million from $1,904 million in the year-ago-quarter, resulting in respective operating margins of 25% and 24.7%.
3M Company Price, Consensus and EPS Surprise
3M Company Price, Consensus and EPS Surprise | 3M Company Quote
Segment Results
Industrial segment sales increased 6.2% year over year to $2,764 million with improvement in all regions, driven by higher sales of advanced materials, automotive and aerospace solutions, industrial adhesives and tapes, and separation and purification sciences products. Operating income increased 3.1% year over year to $614 million for operating margin of 22.2%.
Health Care segment sales improved 7.7% to $1,476 million in the reported quarter, driven by higher sales in drug delivery systems, food safety, and medical consumables. Operating income increased 9.3% year over year to $471 million for operating margin of 31.9%.
Consumer segment revenues were $1,236 million, up 2.2% year over year, driven by higher sales in home improvement, home care and consumer health care. Operating income was $307 million, down 3.2% year over year for operating margin of 24.8%.
Safety and Graphics segment sales increased 1.9% year over year to $1,529 million, owing to higher sales in roofing granules and transportation safety. Operating income increased 10.5% year over year to $410 million for operating margin of 26.8%.
Electronics and Energy segment revenues were $1,414 million, up 13.1% year over year due to growth in electronics material solutions and display materials and systems. Operating income was up 29.9% year over year to $394 million for operating margin of 27.9%.
Balance Sheet and Cash Flow
Cash and cash equivalents at quarter end were $2,831 million, while long-term debt stood at $10,828 million. Cash flow from operating activities for the reported quarter was $1,750 million compared with $1,908 million in the year-ago period, bringing the respective tallies for the first nine months of the year to $4,380 million and $4,453 million. Free cash flow generated for the quarter was $1,425 million, up from $1,561 million in the prior-year period.
During the reported quarter, 3M paid $701 million in cash dividends and repurchased $380 million worth of shares.
Guidance Raised
Buoyed by strong quarterly results and favorable growth dynamics, 3M raised its earlier guidance for 2017. The company anticipates 2017 GAAP earnings in the range of $9.00 to $9.10 per share, up from prior projections of $8.80–$9.05. This represents year-over-year growth of 10–12%, up from 8–11% expected earlier. Organic local-currency sales are expected to be 4–5%, up from 3–5% expected earlier.
3M currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Danaher Corp. (DHR - Free Report) , Honeywell International Inc. (HON - Free Report) and Leucadia National Corp. , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Danaher has a long-term earnings growth expectation of 11.7%. It has beaten earnings estimates in each of the trailing four quarters with an average positive surprise of 2.6%.
Honeywell has a long-term earnings growth expectation of 9.4%. It has beaten earnings estimates thrice in each of the trailing four quarters with an average positive surprise of 2.1%.
Leucadia has a long-term earnings growth expectation of 18%. It has beaten earnings estimates twice in the trailing four quarters with an average positive surprise of 5.4%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>