3M (NYSE:MMM) will release its quarterly report on Thursday, and with the stock at all-time highs shareholders don't have much to complain about. Yet some investors believe that 3M has lost its way in coming up with innovative new products, and in the long run that could leave 3M falling behind the faster-moving General Electric (NYSE:GE) and the health-care conglomerate Johnson & Johnson (NYSE:JNJ).

It's easy to get confused by 3M, which most people know for its office and consumer products. But you can find 3M innovations in a wide variety of areas, ranging from medical and surgical supplies and health information systems to touch-screens and filtration systems components. That puts it squarely in competition with J&J as well as the broader-reaching GE. 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 report.

Stats on 3M

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$7.85 billion

Change From Year-Ago Revenue


Earnings Beats in Past Four Quarters


Source: Yahoo! Finance.

Will 3M surprise on earnings this quarter?
Analysts have had mixed views about 3M earnings in recent months, cutting their third-quarter estimates by $0.03 per share but raising their full-year 2014 projections by double that amount. The stock has continued rising steadily, climbing almost 7% since mid-July.

3M has had some difficulties delivering on its growth promise lately, and its second-quarter report was no exception. Sales rose 2.9%, but that fell short of the slightly higher gains that investors had wanted to see. Looking forward, 3M could only reiterate its full-year guidance rather than raising it, although the company boosted its share-repurchase expectations by about $1.5 billion.

3M still has plenty of opportunities to awaken its innovative spirit, but it faces competition in most of them. For instance, renewable energy represents a big potential growth area for 3M, and the conglomerate has an array of solar-energy and wind-energy products that stand to benefit from increased adoption of renewable energy solutions at both the utility-scale and the residential-scale level. Yet General Electric has been much more aggressive about capitalizing on the booming energy sector, with big investments both in solar and wind energy and in conventional oil and gas applications as well.

Another area where 3M stands to gain is in health care. 3M medical devices serve a wide variety of needs, focusing on specialty adhesives but also encompassing stethoscopes and pathogen testing products. The diagnostics and bandage segments represent areas of direct overlap with Johnson & Johnson, but 3M also adds its health-information management services as well to diversify its offerings. With electronic health information becoming a high priority and with the challenge of converting to the ICD-10 coding system for diseases, advances there could help 3M greatly.

In the 3M earnings report, watch to see which of the conglomerate's many segments performs best and worst. Diversification can be an asset for a conglomerate, but only if it has the wherewithal to make the most of its highest-potential opportunities. 3M needs to do a better job of doing that if it wants to keep up with General Electric and hold Johnson & Johnson at bay.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends 3M and Johnson & Johnson. The Motley Fool owns shares of General Electric and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.