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Here's Why You Should Hold 3M (MMM) in Your Portfolio Now
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3M Company (MMM - Free Report) is benefiting from strength in advanced materials, commercial solutions and auto original equipment manufacturer (OEM) businesses. Also, solid momentum in the auto OEM business driven by an increase in global car and light truck bills are driving the company’s Transportation and Electronics segment. The segment’s revenues grew 4.5% in the fourth quarter of 2023.
Backed by strength across its businesses, management recently raised its earnings guidance for the first quarter of 2024. 3M currently anticipates adjusted earnings in the range of $2.05-$2.20 per share, up from $2.00-$2.15 projected earlier. The projection implies growth of 5.3% at the midpoint from the year-ago levels.
MMM intends to strengthen and expand its businesses through acquisitions. For instance, in April 2022, it acquired technology assets of LeanTec, which has strengthened its capability to deliver a more connected, digital bodyshop solution via its RepairStack Performance Solutions. Also, the company acquired M*Modal’s technology business in February 2019. The buyout expanded its capabilities in the Health Information Systems business. In the fourth quarter of 2023, acquisitions boosted its top line by 0.2%.
3M remains committed to increasing shareholders’ value through dividend payment and share repurchases. For instance, in 2023, it rewarded shareholders with $3.31 billion in dividends and $33 million in buybacks. Also, in February 2024, 3M hiked its quarterly dividend by 0.7% to $1.51 per share.
Image Source: Zacks Investment Research
In the past six months, this Zacks Rank #3 (Hold) company has gained 5.9% compared with the industry’s 5.5% growth.
However, softness in the company’s home health, auto and stationery & office businesses has been affecting its Consumer segment’s performance. For instance, the segment witnessed a year-over-year decrease of 1.6% in sales during the fourth quarter. In addition, decreasing demand for disposable respirators hurt 3M’s Safety and Industrial segment. The segment’s sales fell 2.7% in the final quarter of 2023, following a 4.5% decline in the preceding quarter.
High debt levels have also been major concerns for MMM as it raises financial obligations and might drain its profitability. 3M exited 2023 with long-term debt of $13.1 billion, increasing 1.7% sequentially. Also, interest expenses and other financial charges in the fourth quarter remained high at $279 million.
Stocks to Consider
Some better-ranked companies from the same space are discussed below.
It has a trailing four-quarter average earnings surprise of 42%. The Zacks Consensus Estimate for GFF’s fiscal 2024 earnings has increased 3.9% in the past 60 days.
Carlisle Companies Incorporated (CSL - Free Report) currently flaunts a Zacks Rank #1. CSL delivered a trailing four-quarter average earnings surprise of 7.6%. In the past 60 days, the Zacks Consensus Estimate for CSL’s 2024 earnings has increased 8.2%.
Vector Group Ltd (VGR - Free Report) currently sports a Zacks Rank #1. It delivered a trailing four-quarter average earnings surprise of 10.2%. In the past 60 days, the consensus estimate for VGR’s 2024 earnings has improved 6.9%.
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Here's Why You Should Hold 3M (MMM) in Your Portfolio Now
3M Company (MMM - Free Report) is benefiting from strength in advanced materials, commercial solutions and auto original equipment manufacturer (OEM) businesses. Also, solid momentum in the auto OEM business driven by an increase in global car and light truck bills are driving the company’s Transportation and Electronics segment. The segment’s revenues grew 4.5% in the fourth quarter of 2023.
Backed by strength across its businesses, management recently raised its earnings guidance for the first quarter of 2024. 3M currently anticipates adjusted earnings in the range of $2.05-$2.20 per share, up from $2.00-$2.15 projected earlier. The projection implies growth of 5.3% at the midpoint from the year-ago levels.
MMM intends to strengthen and expand its businesses through acquisitions. For instance, in April 2022, it acquired technology assets of LeanTec, which has strengthened its capability to deliver a more connected, digital bodyshop solution via its RepairStack Performance Solutions. Also, the company acquired M*Modal’s technology business in February 2019. The buyout expanded its capabilities in the Health Information Systems business. In the fourth quarter of 2023, acquisitions boosted its top line by 0.2%.
3M remains committed to increasing shareholders’ value through dividend payment and share repurchases. For instance, in 2023, it rewarded shareholders with $3.31 billion in dividends and $33 million in buybacks. Also, in February 2024, 3M hiked its quarterly dividend by 0.7% to $1.51 per share.
Image Source: Zacks Investment Research
In the past six months, this Zacks Rank #3 (Hold) company has gained 5.9% compared with the industry’s 5.5% growth.
However, softness in the company’s home health, auto and stationery & office businesses has been affecting its Consumer segment’s performance. For instance, the segment witnessed a year-over-year decrease of 1.6% in sales during the fourth quarter. In addition, decreasing demand for disposable respirators hurt 3M’s Safety and Industrial segment. The segment’s sales fell 2.7% in the final quarter of 2023, following a 4.5% decline in the preceding quarter.
High debt levels have also been major concerns for MMM as it raises financial obligations and might drain its profitability. 3M exited 2023 with long-term debt of $13.1 billion, increasing 1.7% sequentially. Also, interest expenses and other financial charges in the fourth quarter remained high at $279 million.
Stocks to Consider
Some better-ranked companies from the same space are discussed below.
Griffon Corporation (GFF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
It has a trailing four-quarter average earnings surprise of 42%. The Zacks Consensus Estimate for GFF’s fiscal 2024 earnings has increased 3.9% in the past 60 days.
Carlisle Companies Incorporated (CSL - Free Report) currently flaunts a Zacks Rank #1. CSL delivered a trailing four-quarter average earnings surprise of 7.6%. In the past 60 days, the Zacks Consensus Estimate for CSL’s 2024 earnings has increased 8.2%.
Vector Group Ltd (VGR - Free Report) currently sports a Zacks Rank #1. It delivered a trailing four-quarter average earnings surprise of 10.2%. In the past 60 days, the consensus estimate for VGR’s 2024 earnings has improved 6.9%.