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Is a Beat in Store for 3M Company (MMM) This Earnings Season?

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3M Company (MMM - Free Report) is scheduled to release second-quarter 2020 results on Jul 28, before market open.

The company delivered better-than-expected results in three of the last four quarters, while lagged estimates once. Earnings surprise for the period was 3.02%, on average. In the last reported quarter, its earnings of $2.16 per share surpassed the Zacks Consensus Estimate of $2.02.

In the past three months, 3M Company’s shares have gained 3.7% compared with the industry’s growth of 10.4%.




 

Let us delve deeper.

Key Factors and Estimates for Q2

Solid product offerings, focus on innovation, efficient workforce and aim to generate healthy free cash flow might have positively impacted the company’s operations in the second quarter of 2020. In addition, the net impact of acquisitions and divestments are expected to have been boons, evident from 3% growth experienced in April and 2% in May.

Also, the pandemic-induced demand for certain products — including general cleaning, food safety, home improvement and personal safety — offered by 3M Company is anticipated to have aided second-quarter performance. In particular, the company anticipates the hike in demand for respirators due to the coronavirus outbreak to boost its core sales by 150 basis points in the quarter.

Apart from these, various measures undertaken by 3M Company to deal with the financial stress caused by the pandemic are expected to get reflected in second-quarter results. Cost-reduction efforts are expected to generate $350-$400 million savings in the quarter.

On the flip side, there are various end-markets — including commercial solutions, general industrial, office supplies, oral care, automotive OEM/ aftermarket and discretionary healthcare — which are expected to have suffered from the pandemic. Geographically, results might have been weak in the Americas; Europe, Middle East and Africa; and the Asia Pacific regions, as reflected in sales update for April and May.

Further, the company’s performance in the quarter is expected to have suffered from unfavorable movements in foreign currencies and high debts.

3M Company expects second-quarter results to be weakest in the year.

The Zack Consensus Estimate for its earnings for the second quarter is pegged at $1.77, suggesting a year-over-year decline of 19.5% and a sequential fall of 18.1%. The consensus estimate for revenues of $7,269 million indicates a year-over-year fall of 11% and a sequential decline of 10%.

Earnings Whispers

Our proven model suggests an earnings beat for 3M Company 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: 3M Company has an Earnings ESP of +3.62% as the Most Accurate Estimate of $1.83 is above the Zacks Consensus Estimate of $1.77.

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 #3.

Other Stocks to Consider

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

Fortune Brands Home & Security, Inc. (FBHS - Free Report) currently has an Earnings ESP of +7.11% and it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Crane Co. (CR - Free Report) has an Earnings ESP of +10.64% and a Zacks Rank #2 at present.

Donaldson Company, Inc. (DCI - Free Report) presently has an Earnings ESP of +6.02% and a Zacks Rank #3.

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