This is a day on which I'm not getting a lot of love for owning two big Dow stocks -- 3M
Looking at 3M's earnings report, we see that revenue climbed 4.6% in the quarter, with 5.1% organic volume growth. That's not terrible, but it's also not all that much better than the country's growth in gross domestic product. 3M did, however, manage to improve its margins again, and operating income climbed 11% while net income (excluding an accounting change) rose by a similar amount.
Growth was strongest in the industrial business, which was helped by the inclusion of the CUNO filtration acquisition and the display/graphics business, where strong demand for LCDs has led to good coatings sales for 3M. The company doesn't have that market all to itself, but as long as customers keep storming Best Buy
I'm a fan of 3M, but even I realize that the company needs to get moving on growth initiatives -- only the industrial segment posted double-digit growth, and that was due to the CUNO deal. Investors can only hope that the board selected the right kind of CEO to make that growth happen.
Unlike former CEO W. James McNerney Jr., who has since gone on to run Boeing
While I don't expect 3M's stock to move too far too fast until the Street sees signs of renewed innovation and top-line growth from the company, I'm content to hang on and bide my time. I'm collecting a nice dividend today, and I still do believe that new management will combine the legacy of great profitability and returns on capital with a renewed R&D vigor and, I hope, better long-term growth.
For more 3M Foolishness:
- 3M In and Out: Fool by Numbers
- 3M Picks Its New Man
- Diving Into the Dow: The First Five
- 3 Cheers for 3M?
3M is a Motley Fool Inside Value recommendation, and Best Buy is a Motley Fool Stock Advisor pick. Find out which Foolish newsletter suits your investing style, and treat yourself to a free 30-day trial.
Fool contributor Stephen Simpson owns shares of 3M and Johnson & Johnson but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares). The Motley Fool has a disclosure policy.