What to Expect When 3M Reports Thursday Morning

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3M Co. (NYSE: MMM) is scheduled to release its second-quarter financial results before the markets open on Thursday. The consensus estimates are calling for $2.05 in earnings per share (EPS) and $8.03 billion in revenue. The same period of last year reportedly had EPS of $2.59 on revenue of $8.39 billion.

Very few investors and analysts seem willing to stick their necks out on when 3M’s road to recovery will become smooth sailing. After a very strong 2017, and after its shares peaked at almost $260 in January of 2018, 3M shares have lost nearly one-third of their value, and the company cannot directly blame just one or two macro issues outside of its control.

The big question investors need to ask is whether 3M’s continually rising dividend is safe. They also should have a right to wonder if 3M can sustain its multidecade streak of annual dividend hikes. When 3M raised its dividend 6% to $1.44 per share each quarter in February of 2019, this marked more than 100 years of consecutive dividend payments and it made for 61 consecutive years of dividend hikes. That blows away the so-called Dividend Aristocrats and makes 3M one of just a tiny portion of S&P 1500 companies with 50 years of dividend hikes.

3M’s dividend hikes were above normal in 2018 (16%), 2015 (20%) and 2014 (35%). That has led to nearly a tripling of the dividends per share paid out to investors since the end of the Great Recession. Its current dividend yield is 3.3%, which is now well above average for Dow Jones industrials and the S&P 500. It is also more than 125 basis points higher than the 10-year Treasury note.

Excluding Wednesday’s move, 3M had underperformed the broad markets, with its stock down about 7% year to date. In the past 52 weeks, the stock was down 12%.

A few analysts weighed in on 3M ahead of the report:

  • UBS has a Neutral rating with a $182 price target.
  • RBC’s Sector Perform rating comes with a $176 target.
  • Merrill Lynch has a Neutral rating and a $185 price target.
  • Barclays has a Sell rating with a $162 target price.
  • Citigroup has a Buy rating with a $197 target price.
  • Morgan Stanley has an Equal Weight rating and a $172 target.

Shares of 3M were last seen up about 1% at $179.36, in a 52-week range of $159.32 to $219.75. The consensus price target is $177.88.


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