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3M (MMM) Gears Up to Post Q4 Earnings: Is a Beat in Store?

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3M Company (MMM - Free Report) is scheduled to release fourth-quarter 2023 results on Jan 23 before market open.

The company delivered better-than-expected results thrice and missed estimates once in the trailing four quarters, the earnings surprise being 16.7%, on average. In the last reported quarter, its earnings of $2.68 per share surpassed the Zacks Consensus Estimate of $2.34 by 14.5%.

Zacks Investment Research
Image Source: Zacks Investment Research

In the past three months, 3M’s shares have gained 23% compared with the industry’s growth of 9.6%.

Key Factors and Estimates for Q4

3M is expected to have benefited from its focus on innovation, digital capabilities and strength across its roofing granules and automotive OEM businesses in the fourth quarter. The company’s solid product offerings, focus on operational execution and aim to generate healthy free cash flow are likely to have positively impacted its operations.

Solid momentum across its oral care and medical solutions businesses is likely to have augmented the Health Care segment’s top line in the fourth quarter. However, weakness in the Health Information Systems business due to lower post-COVID-related biopharma demand is likely to be reflected in its performance. The Zacks Consensus Estimate for Health Care revenues is pegged at $2,108 million, indicating a 3.2% increase from the year-ago reported number.

A healthy consumer business and a recovery in the home improvement market are likely to have boosted the Consumer segment’s revenues in the to-be-reported quarter. The consensus mark for Consumer segment revenues is pegged at $1,301 million, suggesting 4.4% growth from the year-ago reported number.

However, the Transportation & Electronics unit is expected to put up a weak show in the upcoming earnings due to weakness in commercial solutions and transportation safety end markets. Despite the softness, signs of stabilization in its consumer electronics markets might have been a tailwind for the segment. The Zacks Consensus Estimate for Transportation & Electronics revenues is pinned at $1,619 million, implying a 21.2% decline from the year-ago reported number.

Prolonged softness in disposable respirator demand within the Safety and Industrial segment has been weighing on 3M. For 2023, the company expects lower disposable respirator demand and its exit of Russia operations to affect sales by approximately $600 million. The Zacks Consensus Estimate for Safety and Industrial revenues in the fourth quarter is pegged at $2,624 million, indicating a 4.1% decline from the year-ago reported number.

The Zacks Consensus Estimate for 3M’s fourth-quarter total revenues is pegged at $7,686 million, indicating a year-over-year decline of 4.9%. The consensus estimate for the company’s earnings is pegged at $2.31, suggesting year-over-year growth of 1.3%.

3M Company Price and EPS Surprise

3M Company Price and EPS Surprise

3M Company price-eps-surprise | 3M Company Quote

Zacks Model

Our proven model predicts an earnings beat for 3M 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. That is the case here.

3M has an Earnings ESP of +2.41%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company carries a Zacks Rank #3 at present.

Other Stocks With the Favorable Combination

Here are three other companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming release:

General Electric Company (GE - Free Report) currently has an Earnings ESP of +0.31% and a Zacks Rank #2. The company is scheduled to release fourth-quarter results on Jan 23. You can see the complete list of today’s Zacks #1 Rank stocks here.

General Electric pulled off a trailing four-quarter earnings surprise of 53.4%, on average. The stock has gained 20.2% in the past three months.

ITT Inc. (ITT - Free Report) has an Earnings ESP of +0.75% and a Zacks Rank #2. The company is slated to release fourth-quarter results on Feb 8.

ITT delivered a trailing four-quarter earnings surprise of 8%, on average. The stock has rallied 25.3% in the past three months.

Danaher Corporation (DHR - Free Report) has an Earnings ESP of +0.19% and a Zacks Rank #3. The company is slated to release fourth-quarter results on Jan 30.

Danaher delivered a trailing four-quarter earnings surprise of 8.5%, on average. The stock has rallied 9.2% in the past three months.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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