Shares of industrial conglomerate 3M Co (NYSE:MMM) jumped as much as 7.3% in trading Tuesday after the company reported earnings. After years of very slow growth, 3M reported organic local currency growth of 6.6%, driving investors to hope that a turnaround in operations is here. At 11:40 a.m. EDT, shares were still up 6.9% for the day.
Revenue jumped 6% to $8.17 billion and net income was up 7.5% to $1.43 billion, or $2.33 per share. Analysts were only expecting $7.91 billion in revenue and $2.21 per share in earnings, so investors were definitely surprised by the results.
Sales in Asia Pacific led the charge, growing by 12.8% and 23% in China and Hong Kong, respectively. On a divisional basis, electronics and energy organic local currency sales were up 13.2% on the back of 20% growth in Asia Pacific.
What may be more important is that management said it now expects organic local currency growth to be 4% to 5%, up from a previous range of 3% to 5%, and earnings per share to be $9.00 to $9.10, up from previous guidance of $8.80 to $9.05.
3M has been investing more in new products and R&D in recent years, which was intended to lead to more organic sales growth. That strategy appears to be paying off, particularly in Asia's electronics market (think new smartphones).
3M's stock is by no means cheap at 26 times the top end of 2017 guidance, but if the company can generate mid-single-digit organic growth long-term, it could still be a good buy for investors. And a 2.1% dividend yield from a company with a century of dividend history isn't a bad reason to own the stock, either.