Please ensure Javascript is enabled for purposes of website accessibility

3M Sticks to Your Portfolio

By David Smith – Updated Apr 5, 2017 at 7:28PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite a sluggish economy, 3M managed across-the-board improvement.

The weakening global economy has taken its toll on all manner of big, U.S.-based companies. For instance, Caterpillar (NYSE:CAT), which until recently had seemed able to move the earth, has just come through with soft results for the September quarter.

But Fools would be well advised to keep their eyes on 3M (NYSE:MMM), the Minnesota-based maker of Post-it Notes, Scotch tape, and all manner of industrial, health-care, and security products. Unlike many of its peers, the company has nicely bested its year-ago results. And perhaps more importantly, its year-over-year sales growth recorded in the June quarter slid by just a smidgeon in the most recent quarter.

Net income reached $991 million, or $1.41 per share, compared to $960, or $1.32 per share in the same quarter of 2007. And without those good old one-time items, the latest quarter would have reached $999 million on the net line.

Among 3M's seven business segments, five checked in with sales increases from the same quarter in 2007. The two largest units -- Industrial and Transportation, and Health Care -- were in double-digit territory, while Safety, Security, and Protection Services, the third-largest segment, led the parade with a 27.1% jump.

Even in the midst of the unfavorable global economy, 3M managed to boost its operating income margin by 60 basis points to 23.2%, excluding special items. Even more impressive, operation margins for each segmented clocked in above 20%.

Looking ahead, management expects 2008 adjusted earning to come in between $5.40 and $5.48 per share, indicating growth of 8.4% to 10% from 2007. That's but a tiny pullback from the earlier 10% expectation.

So 3M joins Honeywell (NYSE:HON) and United Technologies (NYSE:UTX) in maintaining solid earnings in the quarter. As the economy dwindles, however, formerly stellar performers like DuPont (NYSE:DD) have started to show signs of tougher market conditions. Of course, there are still other major industrial companies waiting in the wings to report. Dow Chemical (NYSE:DOW), for instance, will tell us about its results on Thursday.

It seems, however, that given the nature of its products and the across-the-board consistency of its growth in revenues and profitability, 3M justifies consideration for a position in the big-cap portion of Foolish portfolios. There clearly are fewer and fewer candidates remaining for that position of honor.

3M has been adorned with five stars by Motley Fool CAPS players. Why not weigh in with your opinion on this company?

For related Foolishness:

3M is an Inside Value selection. Dow Chemical was recommended by Income Investor. Check out either service free for 30 days.

Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned above. He does, however, solicit your questions or comments. The Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

3M Company Stock Quote
3M Company
MMM
$112.99 (-1.01%) $-1.15
Caterpillar Inc. Stock Quote
Caterpillar Inc.
CAT
$164.24 (-3.70%) $-6.31
Raytheon Technologies Corporation Stock Quote
Raytheon Technologies Corporation
RTX
$82.03 (-1.70%) $-1.42
Honeywell International Inc. Stock Quote
Honeywell International Inc.
HON
$171.38 (-1.08%) $-1.87
E. I. du Pont de Nemours and Company Stock Quote
E. I. du Pont de Nemours and Company
DD
DuPont de Nemours, Inc. Stock Quote
DuPont de Nemours, Inc.
DOW

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.