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Analyst Blog

Industrial goods manufacturer, 3M Company (MMM - Analyst Report) recently completed the divesture of its temporary protective films business to Pregis LLC, a leading global provider of innovative protective packaging materials, for an undisclosed amount.

The divested business offers adhesive-backed temporary protective films for use in automotive, appliance, metalworking, building and construction industries. Despite annual global sales of approximately $50 million, 3M decided to divest the unit as it was deemed to be a non-core business in its strategic portfolio review. The company is currently focusing more on core adhesives, sealants and tapes businesses under its Industrial Adhesives and Tapes Division.

Pregis manufactures innovative protective packaging materials, equipment systems and surface protection solutions for diversified consumer and industrial market segments including food, beverage, healthcare, medical devices, agricultural, e-commerce, retail, automotive, furniture, electronics, metals, construction and military/aerospace. Consequently, the acquisition of 3M’s protective films business would enable it to extend its portfolio and augment its customer base by leveraging the R&D expertise and employee skill set of the industrial goods behemoth.

3M CO Price


3M CO Price | 3M CO Quote

Maplewood, MN-based 3M employs 90,000 people worldwide, with operations in more than 65 countries. It manufactures over 55,000 products including adhesives, abrasives, laminates, passive fire protection, dental and orthodontic products, electronic materials, medical products, car-care products (sun films, polish, wax, car shampoo, treatment for the exterior, interior and the under chassis rust protection), electronic circuits, and optical films.

3M is facing increased pension expenses as its workforce begins to retire. The related extra costs have been a drag on the company’s bottom line. In addition, as exports form a significant part of the company’s operations and growth prospects, the sustained strength of U.S. dollar will continue to negatively impact the earnings in the short-term.

3M currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Raven Industries Inc. (RAVN - Analyst Report) , Sumitomo Corporation (SSUMY - Snapshot Report) and Barloworld Ltd. (BRRAY - Snapshot Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Raven has a long-term earnings growth expectation of 10% and is currently trading at a forward P/E of 46.1x.

Sumitomo has a long-term earnings growth expectation of 5% and is currently trading at a forward P/E of 11.5x.

Barlow has a long-term earnings growth expectation of 7% and is currently trading at a forward P/E of 9.7x.

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