Are 3M Sales Really Improving?
3M released disappointing second-quarter financial results before the markets opened on Tuesday
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
When 3M Co. (NYSE: MMM | MMM Price Prediction) released its second-quarter financial results before the markets opened on Tuesday, the company said that it had $1.78 in earnings per share (EPS) and $7.2 billion in revenue. That compared with consensus estimates of $1.80 in EPS and $7.32 billion in revenue, as well as the $2.13 per share and $8.17 billion posted in the same period of last year.
During the second quarter, end-market demand remained strong in personal safety, home improvement, general cleaning, semiconductor, data center and biopharma filtration. However, second-quarter sales declined 12.2% year over year.
Organic local-currency sales declined 13.1%, while acquisitions, net of divestitures, increased sales by 2.4%. Foreign currency translation reduced sales by 1.5% year over year.
Total sales declined 0.4% in Health Care and 6.2% in Consumer, with declines of 20.9% in Transportation and Electronics and 9.2% in Safety and Industrial. Organic local-currency sales decreased 5.0% in Consumer, 6.1% in Safety and Industrial, 12.4% in Health Care, and 18.9% in Transportation and Electronics.
[nativounit]
The company’s operating cash flow was $1.9 billion with adjusted free cash flow of $1.5 billion, contributing to adjusted free cash flow conversion of 149%. 3M paid $846 million in cash dividends to shareholders during the quarter and ended the quarter with $4.22 billion in cash and cash equivalents.
The company previously withdrew its full-year outlook due to the evolving and uncertain impact of the COVID-19 pandemic and it is standing by this. However, management did say that 3M is seeing broad-based sales improvements across businesses and geographies to start the third quarter. With one week left in July, total company sales are currently up low-single digits year-on-year.
Looking ahead, analysts are calling for $8.18 in EPS and $31.05 billion in revenue for the 2020 full year. The 2019 numbers were reportedly $9.08 in EPS and $32.14 billion in revenue.
For the third quarter, consensus estimates are calling for $2.14 in EPS and $7.63 billion in revenue. The same period last year had $2.58 in EPS and $7.99 billion in revenue.
3M stock closed Monday at $163.24, in a 52-week range of $114.04 to $182.55. The consensus price target is $158.80. Following the announcement, the stock was down about 3% at $158.70 in early trading indications Tuesday.
[recirclink id=725962][wallst_email_signup]
Contact [email protected] for any questions or corrections.
Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
