3M Co. Earnings: What Investors Want to See

3M has climbed nicely over the past year, but the recent market decline has some investors worried about the company's ability to produce more innovative products. Find out how 3M could accelerate its growth.

Jan 28, 2014 at 12:59PM

3M (NYSE:MMM) will release its quarterly report on Thursday, and from all indications, investors expect the same slow but steady growth that the conglomerate has given them for years. Yet some shareholders worry that 3M hasn't been as aggressive as General Electric (NYSE:GE), Johnson & Johnson (NYSE:JNJ), and other competitors in making ambitious steps forward to try to drive future growth.

3M is well-known for the innovative products it has developed over the decades, with adhesives and office products that still dominate the offerings of its competitors. Yet even though 3M has done a good of identifying acquisition targets to help grow its business, the company hasn't delivered the organic growth rates that investors would prefer to see. The big question facing 3M is whether it can find focus among its diverse set of business divisions and concentrate its innovative efforts toward developing industry-changing products in high-profile areas. 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.

Mmm
New 3M high-performance multi-touch display. Source: 3M.

Stats on 3M

Analyst EPS Estimate

$1.62

Change From Year-Ago EPS

14.9%

Revenue Estimate

$7.71 billion

Change From Year-Ago Revenue

4.3%

Earnings Beats in Past Four Quarters

1

Source: Yahoo! Finance.

Can 3M earnings growth accelerate this quarter?
In recent months, analysts have grown more optimistic about 3M earnings, raising their fourth-quarter estimates by a penny per share and boosting their full-year 2014 projections by about 1%. The stock has also climbed, rising 5% since late October despite a recent pullback that wiped out bigger gains.

3M's third-quarter report included solid fundamentals that boosted the company's overall growth. A 5.6% jump in sales led to a gain of almost 8% in earnings per share. Organic sales growth rose at several key divisions, with safety-and-graphics and health care taking the lead. The company's electronics and energy segment had the slowest growth, but even there, accelerating gains from year-ago levels were promising, especially in light of slower revenue gains from similar segments at General Electric and Dow peer DuPont (NYSE:DD).

The big news for shareholders came last month, when 3M said it would boost its dividend by 35% and spend an additional $22 billion on stock buybacks over the next five years. 3M expects to finance these massive capital returns by producing earnings growth in the 9%-11% range through 2017, and if it's successful, 3M could see its stock continue soaring through a combination of falling share counts and rising income.

To achieve that growth, 3M will have to come up with some new ideas. At the Consumer Electronics Show earlier this month, the company came out with a number of interesting ideas, including large-format digital signs that allow multiple users to use touch-screen interfaces at the same time as well as screen-privacy devices for both desktop computers and mobile devices. As 3M continues to come up with interesting new applications for its technology, it could further enhance its growth rates, finding a niche similar to what General Electric has found in energy and aerospace, and what Johnson & Johnson is increasingly finding in the pharmaceutical space.

In the 3M report, watch to see whether the company successfully delivers not only on its growth-rate numbers, but also on the interesting ideas that investors want to see. Financials aside, what 3M investors really want is a return of the wow factor that led to the company's most lucrative growth phases in the past.

Don't get impatient -- get rich
It's no secret that investors don't like waiting for good results, but your best investment strategy is still to buy shares in solid businesses and keep them for the long term. In the special free report, "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

Click here to add 3M to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers