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3M Rises 40.2% in a Year and Outpaces Industry: Should You Buy the Stock Now?
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Key Takeaways
MMM stock gained 40.2% in a year, outperforming the broader market and key industry peers.
Safety and Industrial strength and aerospace momentum lifted Q125 unit sales by 2.5% and 1.1%, respectively.
High debt, weak Consumer segment and premium valuation weigh on MMM's near-term investment appeal.
3M Company’s (MMM - Free Report) shares have gained 40.2% over the past year, outperforming the S&P 500’s growth of 9.4% and the Zacks Diversified Operations industry’s growth of 3%. The diversified technology company has also outperformed industry players like Honeywell International Inc. (HON - Free Report) and Carlisle Companies Incorporated (CSL - Free Report) , which have returned 3.6% and lost 15.3%, respectively, over the same time frame.
MMM Stock’s Price Performance
Image Source: Zacks Investment Research
Closing at $142.51 in the last trading session, the stock is trading below its 52-week high of $156.35 but significantly higher than its 52-week low of $98.26. 3M stock is trading above both its 50-day and 200-day moving averages, indicating solid upward momentum and price stability. This reflects a positive market sentiment and confidence in the company's financial health and long-term prospects.
The strongest driver of 3M’s business at the moment is solid momentum in the Safety and Industrial segment, driven by strength in roofing granules, industrial adhesives and tapes, and electrical markets. Strong demand for cable accessories, driven by an increase in the construction of data centers and renewable energy projects, is driving the segment’s performance. Also, an increase in demand for industrial and electronics bonding solutions has been proving beneficial.
In the first quarter of 2025, revenues from the electrical, industrial adhesives and tapes markets grew in the high-single-digit range, while the same from roofing granules, industrial specialties and personal safety markets increased in the low-single-digit range. The Safety and Industrial segment’s organic sales improved 2.5% year over year in the quarter.
The company’s Transportation and Electronics segment is witnessing strength in the aerospace market. Robust momentum in the commercial aircraft and defense-related business and project wins in the advanced materials business are proving beneficial for the segment.
The aerospace market’s revenues increased in the low-double-digit range in the first quarter, while the same from the advanced materials market grew in the high-single-digit range. The Transportation and Electronics segment’s adjusted organic sales grew 1.1% in the quarter. However, persistent weakness in the automotive electrification market, due to lower automotive OEM build rates, has remained a major concern.
3M remains focused on rewarding its shareholders through dividend payouts and share buybacks. In first-quarter 2025, it used $396 million in paying out dividends and $1.3 billion in buybacks. Also, in 2024, it paid dividends worth $2 billion and repurchased shares for $1.8 billion. In February 2025, the quarterly dividend was hiked by 4%. For 2025, it expects to repurchase shares worth $2 billion.
MMM’s Near-Term Concerns
3M has been grappling with persistent weakness in the Consumer segment due to soft consumer discretionary spending. The segment’s revenues declined 1.4% in the first quarter, following a 1.9% decrease in 2024. There was a particular weakness in the command and packaging expression businesses. It expects consumer retail discretionary spending on hardline goods to remain muted in the near term, which is likely to hurt its overall performance.
Exiting the first quarter, 3M’s long-term debt was high at $12.3 billion, reflecting an increase of 10.8% sequentially. Also, interest expenses in the quarter remained high at $255 million. Its short-term borrowings and current portion of long-term debt totaled $1.2 billion. 3M’s long-term debt-to-capital ratio is currently pegged at 73.1%, higher than the industry’s 54%. High debt levels, if not controlled, can increase financial obligations and prove detrimental to profitability in the quarters ahead.
MMM also operates in the highly competitive electronics, transportation, aerospace, defense and other markets, comprising well-recognised providers of highly engineered products. As one of its peers, Honeywell serves as a global diversified technology and manufacturing company, with diversified products and services. Carlisle, another peer, engages in the design, manufacture and sale of a wide range of roofing, waterproofing and engineered products, and finishing equipment.
3M’s Earnings Estimate Revisions
Earnings estimates for 3M have moved down over the past 60 days. Earnings estimates for second-quarter 2025 and 2025 have declined 1% and 0.9%, respectively. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Image Source: Zacks Investment Research
Stretched Valuation Remains an Overhang
MMM is trading at a premium to industry peers with a forward 12-month price-to-earnings (P/E) multiple of 17.96X. The current valuation is above its five-year median of 15.98X and has surpassed the broader industry’s multiple of 16.37X. In comparison, Honeywell and Carlisle are trading at 20.56X and 15.11X, respectively.
Image Source: Zacks Investment Research
Summing Up
Despite 3M’s several upsides and robust share price returns, the near-term challenges, such as weakness in the retail market, high debt level and premium valuation, are limiting this Zacks Rank #3 (Hold) company’s near-term prospects. While current shareholders should hold their positions, new investors should wait for the stock to retract some of its recent gains and provide a better entry point.
Image: Bigstock
3M Rises 40.2% in a Year and Outpaces Industry: Should You Buy the Stock Now?
Key Takeaways
3M Company’s (MMM - Free Report) shares have gained 40.2% over the past year, outperforming the S&P 500’s growth of 9.4% and the Zacks Diversified Operations industry’s growth of 3%. The diversified technology company has also outperformed industry players like Honeywell International Inc. (HON - Free Report) and Carlisle Companies Incorporated (CSL - Free Report) , which have returned 3.6% and lost 15.3%, respectively, over the same time frame.
MMM Stock’s Price Performance
Image Source: Zacks Investment Research
Closing at $142.51 in the last trading session, the stock is trading below its 52-week high of $156.35 but significantly higher than its 52-week low of $98.26. 3M stock is trading above both its 50-day and 200-day moving averages, indicating solid upward momentum and price stability. This reflects a positive market sentiment and confidence in the company's financial health and long-term prospects.
MMM Stock Trading Above 50-Day & 200-Day Moving Averages
Image Source: Zacks Investment Research
Factors Favoring the Company
The strongest driver of 3M’s business at the moment is solid momentum in the Safety and Industrial segment, driven by strength in roofing granules, industrial adhesives and tapes, and electrical markets. Strong demand for cable accessories, driven by an increase in the construction of data centers and renewable energy projects, is driving the segment’s performance. Also, an increase in demand for industrial and electronics bonding solutions has been proving beneficial.
In the first quarter of 2025, revenues from the electrical, industrial adhesives and tapes markets grew in the high-single-digit range, while the same from roofing granules, industrial specialties and personal safety markets increased in the low-single-digit range. The Safety and Industrial segment’s organic sales improved 2.5% year over year in the quarter.
The company’s Transportation and Electronics segment is witnessing strength in the aerospace market. Robust momentum in the commercial aircraft and defense-related business and project wins in the advanced materials business are proving beneficial for the segment.
The aerospace market’s revenues increased in the low-double-digit range in the first quarter, while the same from the advanced materials market grew in the high-single-digit range. The Transportation and Electronics segment’s adjusted organic sales grew 1.1% in the quarter. However, persistent weakness in the automotive electrification market, due to lower automotive OEM build rates, has remained a major concern.
3M remains focused on rewarding its shareholders through dividend payouts and share buybacks. In first-quarter 2025, it used $396 million in paying out dividends and $1.3 billion in buybacks. Also, in 2024, it paid dividends worth $2 billion and repurchased shares for $1.8 billion. In February 2025, the quarterly dividend was hiked by 4%. For 2025, it expects to repurchase shares worth $2 billion.
MMM’s Near-Term Concerns
3M has been grappling with persistent weakness in the Consumer segment due to soft consumer discretionary spending. The segment’s revenues declined 1.4% in the first quarter, following a 1.9% decrease in 2024. There was a particular weakness in the command and packaging expression businesses. It expects consumer retail discretionary spending on hardline goods to remain muted in the near term, which is likely to hurt its overall performance.
Exiting the first quarter, 3M’s long-term debt was high at $12.3 billion, reflecting an increase of 10.8% sequentially. Also, interest expenses in the quarter remained high at $255 million. Its short-term borrowings and current portion of long-term debt totaled $1.2 billion. 3M’s long-term debt-to-capital ratio is currently pegged at 73.1%, higher than the industry’s 54%. High debt levels, if not controlled, can increase financial obligations and prove detrimental to profitability in the quarters ahead.
MMM also operates in the highly competitive electronics, transportation, aerospace, defense and other markets, comprising well-recognised providers of highly engineered products. As one of its peers, Honeywell serves as a global diversified technology and manufacturing company, with diversified products and services. Carlisle, another peer, engages in the design, manufacture and sale of a wide range of roofing, waterproofing and engineered products, and finishing equipment.
3M’s Earnings Estimate Revisions
Earnings estimates for 3M have moved down over the past 60 days. Earnings estimates for second-quarter 2025 and 2025 have declined 1% and 0.9%, respectively. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Image Source: Zacks Investment Research
Stretched Valuation Remains an Overhang
MMM is trading at a premium to industry peers with a forward 12-month price-to-earnings (P/E) multiple of 17.96X. The current valuation is above its five-year median of 15.98X and has surpassed the broader industry’s multiple of 16.37X. In comparison, Honeywell and Carlisle are trading at 20.56X and 15.11X, respectively.
Image Source: Zacks Investment Research
Summing Up
Despite 3M’s several upsides and robust share price returns, the near-term challenges, such as weakness in the retail market, high debt level and premium valuation, are limiting this Zacks Rank #3 (Hold) company’s near-term prospects. While current shareholders should hold their positions, new investors should wait for the stock to retract some of its recent gains and provide a better entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.