Multinational conglomerate based in St. Paul, Minn. 3M Company’s (MMM) the current dividend yields 3.54%. It has increased its dividend for 63 consecutive years. And the company’s fourth-quarter 2021 revenue and adjusted EPS beat Street’s estimates by 3.6% and 14.4%, respectively.
But the company’s fourth-quarter numbers compare poorly to a year earlier and disappointed investors. MMM has also agreed with Neogen Corporation (NEOG) to separate its food safety business and combine it simultaneously with NEOG to be fiscally efficient.
MMM stock is down 5.7% in the past month and 15.4% in the past six months to close yesterday’s trading session at $167.43. Additionally, it is currently trading 19.9% below its 52-week high of $208.95, which it hit on May 10, 2021. Supply chain disruptions and rising raw material costs make the company’s short-term outlook uncertain. .
Here’s what could shape MMM’s performance in the coming months:
In terms of trailing 12-month net margin, MMM’s 16.75% is 161.8% higher than the industry average of 6.40. And its 13.33% 12-month leveraged FCF margin is 152% higher than the industry average of 5.29%. In addition, the respective values of 42.32%, 14.64% and 12.58% of the shares over 12 months ROCEROTC and ROTA are above the industry averages of 13.58%, 6.62% and 5.12%.
MMM’s net sales increased 0.3% year-on-year to $8.61 billion in the fourth quarter ended December 31, 2021. However, its operating profit decreased 12.6% year-on-year to reach $1.62 billion. Additionally, its net income was $1.34 billion, down 4.7% year-on-year. The company’s EPS fell 4.1% year-over-year to $2.31.
In terms of forward P/B, MMM’s 5.79x is 108.3% above the industry average of 2.78x. Its forward P/S of 2.61x is 66.4% better than the industry average of 1.57x. And the stock’s non-GAAP PEG and EV/S of 2.41x and 2.94x, respectively, are above industry averages of 1.48x and 1.88x.
POWR ratings don’t indicate enough advantage
MMM has an overall C rating, which equates to a neutral in our POWR Rankings system. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree.
Our proprietary scoring system also rates each stock against eight distinct categories. MMM has a C rating for value, which is in line with its above-industry valuation ratios.
MMM also has a D rating for growth and sentiment. This is warranted as analysts expect its EPS to decline 11.2% year over year to $2.46 for the quarter ending March 31, 2022.
MMM is ranked #49 out of 79 stocks in the Industrial machinery industry. Click here to also access MMM’s ratings for Momentum, Stability and Quality.
MMM is currently trading below its 50-day and 200-day moving averages of $175.40 and $188.49, respectively, indicating a downtrend. Therefore, MMM looks overvalued at its current price level, and it might be wise to wait for a better entry point in the stock.
How does 3M (MMM) compare to its peers?
Although MMM has an overall POWR rating of C, one might consider investing in industrial-machine stocks with an A (Strong Buy) rating, such as Tennant Company (CNC), GEA Aktiengesellschaft Group (GEAGY) and Curtiss-Wright Corporation (C.W.).
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MMM shares were trading at $166.78 per share on Wednesday afternoon, down $0.65 (-0.39%). Year-to-date, the MMM is down -6.11%, compared to a -4.15% rise in the benchmark S&P 500 over the same period.
About the Author: Nimesh Jaiswal
At Nimesh Jaiswal a fervent interest in the analysis and interpretation of financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving the price of a stock is the key approach he follows while advising investors in his articles. Following…