Consumer-products companies 3M
Minnesota-based 3M -- which makes Post-it Notes, medical and surgical supplies, and Scotch tape, among other products -- reported net income of $928 million, or $1.28 per share -- a 1% dip from the $935 million, or $1.30 per share, for the final quarter of 2009. Sales were up 9.6% to $6.71 billion. The analysts' consensus expectation included earnings of $1.27 per share on sales of $6.59 billion, or just a penny below the actual results on the EPS line.
The one-cent beat, unlike the stronger quarters turned in by the likes of General Electric
Among the company's six sectors, the Electro and Communications unit led the parade with a 20.3% hike in its sales. Industrial and Transportation -- the biggest unit with $2.1 billion in revenues -- was up 10.4%, while Display and Graphics increased its contribution to the top line by 10.2%. In contrast, while sales for the Health Care segment were up 5.9%, fully 4.3% of the growth was tied to an acquisition. Last year's Health Care results got a boost from the scare related to the H1N1 "swine flu."
Perhaps because 3M is considered an economic bellwether, along with such other major (although disparate) companies as Caterpillar and Procter & Gamble -- both of which will report this week -- CEO George Buckley discussed the nation's economy at some length during his post-release call. As he said, "I don't expect to see big improvements in the U.S. until employment takes a turn for the better." On that basis, "we will spend cautiously in the early part of this year."
But despite 3M's uninspiring results, increasing costs, lower margins, and an economy that is still struggling, management's expectations remain somewhat positive. In fact, the company raised its forecast for 2011 to $5.95 to $6.20 per share, versus the prior range of $5.90 to $6.10.
My inclination regarding 3M's shares is to remain on the sidelines, at least until more economically sensitive companies have checked in during this earnings season. By then, we should have a better notion of whether, for instance, DuPont's surprising thumping of the analysts' numbers or 3M's flattish results is more indicative of future trends.
3M and Johnson & Johnson are Motley Fool Inside Value picks. Procter & Gamble is a Motley Fool Income Investor recommendation. Johnson & Johnson is a Motley Fool Income Investor choice. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson. The Fool owns shares of Johnson & Johnson. Motley Fool Alpha owns shares of 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. Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned in this article. The Motley Fool has a disclosure policy.