3M (NYSE:MMM), maker of Post-It Notes and Thinsulate, among many other items, reported second-quarter earnings this morning of $0.97 per share versus an estimate of $0.96. Revenues came in a bit light, at $5.01 billion, compared with expectations. 3M earned $0.78 per share in last year's second quarter and had revenues of $4.6 billion in that period. The firm raised guidance for its fiscal year, but not enough to satisfy the Street. In reaction, the stock was down more than 4% in early trading.

3M's metrics still look very good, though. The firm's ROE is 35%, and it has very little debt. 3M trades at 20 times earnings for 2005, which is about the same as the market's P/E for 2005. It has a beta of 0.49 and has substantially outperformed the S&P 500 over the last five years. Earnings are expected to grow by 12% in 2005 while revenue estimates look for 8% growth.

If you're not familiar with 3M, all you need to do is look around the house. Like fellow consumer product giant Procter & Gamble (NYSE:PG), 3M boasts impressive brands. The conglomeration sports "subsidiaries in more than 60 countries, including manufacturing operations in 38 and research and development facilities in 29." 3M makes thousands of products in diverse areas, including technology, office supplies, automotive, medical, and food services.

To begin to understand the company's success is to know that CEO James McNerney worked at the conglomerate of all conglomerates, General Electric (NYSE:GE), for 15 years under Jack Welch. While not all Welch disciples have done well, 3M has thrived under McNerney's stewardship.

What does this mean for the future? Every page I visited on the 3M website had the word "innovation" across the top. It is clear that the company will not be static. Remember that it is a conglomerate. This type of company is more difficult to manage than a company that focuses on one major area of business and other product lines that have synergies with that main business.

Generally speaking, conglomerates are more difficult companies to run. To buy shares in the company is to realize that one day this could be an issue, but not now. The stock's outperformance shows that the market looks favorably on the job done by Mr. McNerney so far.

The stock is viewed by many to be a cyclical stock and has had a high correlation to Morgan Stanley Cyclical Index, but it has outperformed that index. I think the biggest obstacle for shareholders at this point would be a downturn in the cyclical group caused by some sort of macroeconomic problem such as an economic downturn or costs of goods sold going way up.

Fool contributor Roger Nusbaum is an investment manager and wildland firefighter in Prescott, Ariz. At press time, neither he nor his clients owned any of the stocks mentioned.