This is an important week for the stock market, as many investors are looking at the Federal Reserve to determine whether they'll see another interest rate hike from its monetary policy committee. With rates already having risen 5 full percentage points since early 2022, the bear market for the Dow Jones Industrial Average (^DJI 0.40%) last year expressed fear about economic weakness, and this year's recovery has hinged on the notion that even a recession won't be catastrophic for the business community.
Among Dow stocks, you'll find a variety of different industries represented. This morning, 3M (MMM 0.46%) and Verizon Communications (VZ 1.17%) released their latest financial results, and investors were generally pleased with what both companies had to say. Here's more on what these two Dow component companies said and what it could mean for shareholders and the broader investing community.
3M tries to get past settlement pressures
Shares of 3M climbed almost 3% in premarket trading immediately before the market opened. The industrial conglomerate had to deal with a substantial hit from a legal settlement, but it's more optimistic about what the future could bring.
3M's financial numbers for the second quarter weren't pretty. Adjusted revenue of $7.99 billion was down almost 5% year over year, with a 2.5% drop in organic sales. 3M posted a massive $12.35-per-share loss for the quarter, and even after it made appropriate allowances for one-time items, adjusted earnings of $2.17 per share were down 11% from year-ago levels.
Most of the losses came from the $10.3 billion charge 3M took in conjunction with its proposed settlement of PFAS litigation with public water systems across the nation. Under the terms of the proposed deal, 3M will make payments over a 13-year period.
Yet to try to reassure shareholders, 3M boosted its full-year earnings guidance. The company now expects 2023 adjusted earnings per share of $8.60 to $9.10, up $0.10 per share from its previous outlook.
Investors have had to deal with plenty of headwinds for 3M, but the potential to put its public water systems liability behind it is a huge boost for long-term investors. If spinning off its healthcare business can lead to better financial results, then there's plenty of upside for 3M stock.
Verizon makes the most of tough times
Similarly, shares of Verizon also rose by nearly 3%. Its second-quarter report included some good news on the subscriber front, even though most of its financial numbers were weaker than a year ago.
Verizon's total operating revenue fell 3.5% year over year to $32.6 billion. Net income of $4.8 billion was down more than 10% from year-ago levels. However, even though earnings of $1.21 per share on an adjusted basis were down a dime from what Verizon posted in the second quarter of 2022, the bottom line fared better than many investors had expected.
Operational metrics were more encouraging. Verizon added 418,000 total net broadband subscribers, making it the third straight quarter in which the telecom provider has seen that number top the 400,000 mark. On the wireless side, Verizon saw postpaid net additions of 612,000, wowing investors as consumers remained strong.
Even with the threat of potential liability from lead-containing materials, Verizon left its 2023 guidance unchanged. That's a sign of confidence from the company, and it's one that could inspire shareholders in other companies to have similar confidence.
