Are Investors Too Cautious on 3M After Earnings?

When 3M Co. (NYSE: MMM) released its third-quarter financial results before the markets opened on Tuesday, the company said that it had $2.43 in earnings per share (EPS) and $8.4 billion in revenue. That compared with consensus estimates of $2.26 in EPS and $8.29 billion in revenue, as well as the $2.58 per share and $7.99 billion posted in the same period of last year.

During the third quarter, sales grew 4.5% year over year, with organic local-currency sales growing 0.9%. Foreign currency translation increased sales by 0.6%.

Total sales grew 25.5% from last year in Health Care, 6.9% in Safety and Industrial and 5.6% in Consumer, with a decline of 7.4% in Transportation and Electronics. Organic local-currency sales increased 8.1% year over year in Health Care, 6.9% in Safety and Industrial and 5.5% in Consumer, with a decrease of 7.1% in Transportation and Electronics.

The company’s operating cash flow was $2.5 billion, with adjusted free cash flow of $2.2 billion contributing to adjusted free cash flow conversion of 153%.

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 sales improving across its businesses and geographies. With one week left in October, total company sales are currently flat to up low-single digits for this month versus last year.

Looking ahead, analysts are calling for $8.35 in EPS and $31.84 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 $2.19 in EPS and $8.29 billion in revenue. The same period last year had $2.15 in EPS and $8.11 billion in revenue.

3M stock traded down 2% to $166.16 on Tuesday, in a 52-week range of $114.04 to $182.55. The consensus price target is $170.19.

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