Will 3M Earnings Move the Dow?

With dozens of companies having reported quarterly results, we're in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk decision.

Let's turn to 3M (NYSE: MMM  ) . With its gain of 17% easily outpacing most of its compatriots in the Dow Jones Industrial Average (DJINDICES: ^DJI  ) in 2012, the conglomerate has done a good job of navigating a tough economic climate. Let's take an early look at what's been happening with 3M over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on 3M

Analyst EPS Estimate

$1.41

Change From Year-Ago EPS

4.4%

Revenue Estimate

$7.19 billion

Change From Year-Ago Revenue

1.4%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo Finance.

Will 3M move the markets?
Analysts have kept their estimates of 3M's earnings relatively stable since the company released its third-quarter report. Recently, though, investors have gotten increasingly optimistic about 3M, and the stock has soared in the past month to give shareholders a return of about 5% since mid-October.

3M has been massively successful over the decades at providing customers with innovative products. Yet concerns have arisen that the pace of innovation at 3M has slowed down, leading to slower organic growth and increasing the company's reliance on acquisitions. For 3M to reverse that trend, new CEO Inge Thulin needs to demonstrate his ability to lead the company forward, using his status as a longtime company insider to restoke the creativity that has led to so many successful products in the past.

Still, 3M's acquisitions will be important growth-drivers going forward. 3M's buyout of Ceradyne, which closed this quarter, will give the company a chance to use Ceradyne's industrial-ceramics expertise to improve existing products and spearhead new ones. Adding Ceradyne customers Petroleo Brasileiro (NYSE: PBR  ) and Cummins (NYSE: CMI  ) to the 3M fold could potentially help both those customers and 3M, as a broader relationship could lead Petrobras and Cummins to take advantage of more 3M products to their mutual benefit.

3M needs to keep its eyes on its competitors, though. In particular, General Electric (NYSE: GE  ) has returned to its industrial roots and now challenges 3M with stronger organic growth and a healthier financial condition. Having recovered fully from the financial crisis, GE will inevitably butt heads with 3M repeatedly as both seek to expand into high-growth areas of the economy.

3M investors should look for signs in this quarter's report that the company is returning to its historical focus on innovation. Without that long-term view, any of 3M's shorter-range results lack the context you need to accurately assess their future impact.

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