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What's in the Offing for 3M Company (MMM) in Q2 Earnings?
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3M Company (MMM - Free Report) is scheduled to report second-quarter 2018 results on Jul 24, before the opening bell.
The company pulled off an average positive earnings surprise of 2.12% in the trailing four quarters. Notably, in the last reported quarter, the company posted earnings of $2.50, which came in line with the Zacks Consensus Estimate.
Let’s see how things are shaping up for this announcement.
Factors to Consider
3M has a diversified product portfolio. However, the company’s growth initiatives are mostly dependent on timing and market acceptances of its product offerings, including its ability to frequently renew its pipeline of new offerings and bring those to market at acceptable price points. Also, the company has to manage commodity price risks through negotiated supply contracts, price protection agreements and forward physical contracts. These make it susceptible to commodity prices risk.
Also, 3M is suffering from rising cost of sales over the last few quarters. For instance, the company’s cost of sales flared 6.4% in 2017 and escalated 9.1% in first-quarter 2018. High retirement benefit cost, inflation in the prices of major inputs, escalating freight expenses had primarily resulted in the rise. Rising cost, if not checked, will continue weighing on the company’s profitability in the upcoming quarters as well.
Moreover, the company’s international presence makes it susceptible to tremendous local competitive pressure, particularly in Brazil, China, India and Indonesia. As a matter of fact, the company has to locally develop, manufacture, hire and purchase in order to survive the competitive environment. This, in turn, may reduce its profitability to some extent due to continuous investments in value drivers that act as a hedge against stiff competition.
However, the Zacks Consensus Estimate for second-quarter revenues from the Industrial segment (which constitutes a major portion of 3M’s total revenues) remains high at $3,147 million, reflecting an increase of 15.7% year over year. Also, revenues from the Safety and Graphics segment are also anticipated to be strong with the consensus estimate pegged at $1,827 million compared with $1,547 million reported in the year-ago quarter.
Earnings Whispers
Our proven model does not conclusively show an earnings beat for 3M this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: 3M has an Earnings ESP of -0.90%. This is because the Most Accurate estimate of $2.57 is pegged lower than the Zacks Consensus Estimate of $2.59. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: 3M has a Zacks Rank #4 (Sell), which when combined with a negative ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Key Picks
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
United Technologies Corporation has an Earnings ESP of +0.76% and a Zacks Rank #3.
ITT Inc. (ITT - Free Report) has an Earnings ESP of +0.17% and a Zacks Rank #3.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
What's in the Offing for 3M Company (MMM) in Q2 Earnings?
3M Company (MMM - Free Report) is scheduled to report second-quarter 2018 results on Jul 24, before the opening bell.
The company pulled off an average positive earnings surprise of 2.12% in the trailing four quarters. Notably, in the last reported quarter, the company posted earnings of $2.50, which came in line with the Zacks Consensus Estimate.
Let’s see how things are shaping up for this announcement.
Factors to Consider
3M has a diversified product portfolio. However, the company’s growth initiatives are mostly dependent on timing and market acceptances of its product offerings, including its ability to frequently renew its pipeline of new offerings and bring those to market at acceptable price points. Also, the company has to manage commodity price risks through negotiated supply contracts, price protection agreements and forward physical contracts. These make it susceptible to commodity prices risk.
Also, 3M is suffering from rising cost of sales over the last few quarters. For instance, the company’s cost of sales flared 6.4% in 2017 and escalated 9.1% in first-quarter 2018. High retirement benefit cost, inflation in the prices of major inputs, escalating freight expenses had primarily resulted in the rise. Rising cost, if not checked, will continue weighing on the company’s profitability in the upcoming quarters as well.
Moreover, the company’s international presence makes it susceptible to tremendous local competitive pressure, particularly in Brazil, China, India and Indonesia. As a matter of fact, the company has to locally develop, manufacture, hire and purchase in order to survive the competitive environment. This, in turn, may reduce its profitability to some extent due to continuous investments in value drivers that act as a hedge against stiff competition.
However, the Zacks Consensus Estimate for second-quarter revenues from the Industrial segment (which constitutes a major portion of 3M’s total revenues) remains high at $3,147 million, reflecting an increase of 15.7% year over year. Also, revenues from the Safety and Graphics segment are also anticipated to be strong with the consensus estimate pegged at $1,827 million compared with $1,547 million reported in the year-ago quarter.
Earnings Whispers
Our proven model does not conclusively show an earnings beat for 3M this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: 3M has an Earnings ESP of -0.90%. This is because the Most Accurate estimate of $2.57 is pegged lower than the Zacks Consensus Estimate of $2.59. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
3M Company Price and EPS Surprise
3M Company Price and EPS Surprise | 3M Company Quote
Zacks Rank: 3M has a Zacks Rank #4 (Sell), which when combined with a negative ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Key Picks
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Honeywell International Inc. (HON - Free Report) has an Earnings ESP of +0.16% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
United Technologies Corporation has an Earnings ESP of +0.76% and a Zacks Rank #3.
ITT Inc. (ITT - Free Report) has an Earnings ESP of +0.17% and a Zacks Rank #3.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>