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Category: Stock Market and 3M (MMM)
Date: 2 August 2020 Stock Price of 3M: $150.47 We take a look at the 2nd quarter earnings release of their 2020 fiscal year of 3M a manufacturing firm whose latest quarterly sales came in at $7.2 billion, down -12.2% over the same quarter of the previous year, as Covid-19 affected the group's operations.
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While our results were significantly impacted by the global economic slowdown, we executed well, managed our costs and delivered another quarter of robust cash flow - Mike Roman, 3M chairman and chief executive officer."
About 3M
At 3M, we apply science in collaborative ways to improve lives daily. With $32 billion in sales, our 96,000 employees connect with customers all around the world
Safety & IndustrialWith Leading Market Positions In:
Transportation & ElectronicsWith Leading Market Positions In:
Health CareWith Leading Market Positions In:
ConsumerWith Leading Market Positions In:
Safety & IndustrialWith Leading Market Positions In:
- Respiratory, hearing and eye protection solutions
- Building safety solutions
- Structural adhesives and tapes
- Industrial abrasives
- Autobody repair solutions
- Medium voltage cable accessories and insulation tapes
Transportation & ElectronicsWith Leading Market Positions In:
- Display enhancement films, optically-clear adhesives, and electronics assembly solutions
- Attachment tapes, protective films, sound and temperature management for transportation OEM’s
- Auto electrification solutions
- Reflective signage for highway and construction safety
- Premium large format graphic films for advertising and fleet signage
Health CareWith Leading Market Positions In:
- Skin, wound care, and infection prevention
- Dentistry and orthodontia
- Coding and reimbursement software
- Filtration and purification systems
- Drug delivery (inhalation and transdermal systems)
- Food safety indicator solutions
ConsumerWith Leading Market Positions In:
- Retail abrasives and paint accessories
- Car Care DIY
- Consumer air quality solutions
- Stationery products
- Cleaning products for the home
- Consumer bandages, braces, and supports
Overview of 3M's 2nd quarter 2020 earnings report
The data provided below refers to the latest quarter's data unless specified otherwise
- Net sales: $7.2 billion (up from $7.837 billion from the same quarter of the previous year)
- Net sales decreased by -12.2 % over the last 12 months
- Operating expenses: $6.412 billion (down from $6.727 million for the same quarter of the previous year)
- Cost of sales decreased by -4.7% over the last 12 months
- Net income: $1.292 billion (up from $893 million for the same quarter of the previous year)
- Diluted earnings per share: $2.22 (up from $1.51 for the same quarter of the previous year)
- PE ratio of Poolcorp: 17.6
- Diluted weighted-average shares outstanding: 581.5 million (up from 588.5 million for the same quarter of the previous year)
- Cash and cash equivalents: 4.253 billion
- Cash and cash equivalents per share: $7.31
- Cash and cash equivalents makes up 4.67% of 3M's market capital
- Cash and cash equivalents makes up 9.2% of 3M's current assets
- Inventories: $4.217 billion
- Inventories makes up 9.1% of 3M's total assets
- Stockholders equity of 3M: $10.219 billion
- Stockholders equity per share: $17.57
- So 3M is trading at 8.9 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For some perspective the firms in the S&P500 trades at an average price to book value of 3.34. Read more about the S&P 500 here.
- Cash generated from operations : $1.213 billion
- Cash generated from operations per share: $2.08
3M's management commentary on their 2nd quarter 2020 earnings report
ST. PAUL, Minn. – July 28, 2020 − 3M (NYSE: MMM) today reported second-quarter 2020 results. “While our results were significantly impacted by the global economic slowdown, we executed well, managed our costs and delivered another quarter of robust cash flow,” said Mike Roman, 3M chairman and chief executive officer. “We are taking actions to navigate near-term challenges, while relentlessly innovating for our customers and investing for the future to lead out of the slowdown and continue to deliver long-term value for our shareholders “
Globally across 3M, we continue to fight the pandemic from all angles and help ensure the safety of our employees, healthcare workers and first-responders, and the public,” Roman continued. “I remain incredibly proud of how our team is leading through these unprecedented times, and I thank all 3Mers for their tireless efforts.”
Globally across 3M, we continue to fight the pandemic from all angles and help ensure the safety of our employees, healthcare workers and first-responders, and the public,” Roman continued. “I remain incredibly proud of how our team is leading through these unprecedented times, and I thank all 3Mers for their tireless efforts.”
Advancing Pandemic Response in Dynamic Environment
3M has been aggressively responding to the COVID-19 pandemic given its critical role as a provider of personal protective equipment in the U.S. and across the world. The company continues to adjust and adapt quickly with a focus on mitigating the near-term impact while positioning 3M’s businesses for success coming out of the crisis. The company continues to:
Guidance Remains Withdrawn;
July 2020 Sales Trends Due to the continued evolving and uncertain impact of the COVID-19 pandemic, 3M is not able to estimate the full duration, magnitude and pace of recovery across its diverse end markets with reasonable accuracy. Therefore, 3M continues to believe it is prudent to not provide guidance. The company is seeing broad-based sales improvements across businesses and geographies to start the third quarter. With one week left in July, total company sales are currently up low-single digits year-on-year. 3M will maintain its monthly reporting of sales information during the third-quarter to provide transparency on its ongoing business performance.
3M has been aggressively responding to the COVID-19 pandemic given its critical role as a provider of personal protective equipment in the U.S. and across the world. The company continues to adjust and adapt quickly with a focus on mitigating the near-term impact while positioning 3M’s businesses for success coming out of the crisis. The company continues to:
- Protect employees o Strong, global workplace safety protocols to protect employees o Employees effectively adjusting to different ways to work while ensuring business continuity o In early stages of return-to-workplace; complying with government guidelines and policies
- Lead in pandemic response
- Global production of nearly 800 million respirators in the first half of 2020; approximately 50 percent distributed in U.S. primarily to healthcare and FEMA; on-track to approximately 2 billion globally, including 1 billion in the U.S. for full-year 2020
- Partnering with U.S. Department of Defense and other governments to expand global respirator manufacturing capacity
- Advanced membrane technology being used in blood oxygenation procedures; biopharma filtration solutions supporting new vaccine and therapeutic development efforts
- Expanding partnerships, including new innovative rapid diagnostic COVID-19 test with the Massachusetts Institute of Technology
- Fight fraud and price gouging
- Created hotlines and websites around the world to report suspected fraud o Filed 18 lawsuits including in 10 U.S. states and Canada
- Secured removal of more than 7,000 counterfeit websites and more than 10,000 false or deceptive social media posts to date
- Relentlessly serve customers
- Maintaining strong customer service with new global enterprise operations team
- Ongoing adjustments to manufacturing/supply chain operations as demand trends evolve
- Nearly all plants and distribution centers fully or partially operational
- Continue to innovate for customers to solve big challenges such as air quality, automotive electrification and food safety; Priority Growth Platforms outperforming markets they serve
- Protect financial flexibility
- Strong operating cash flow of $1.9 billion, up 15 percent year-on-year; adjusted free cash flow of $1.5 billion, up 18 percent year-on-year, benefitting from year-on-year improvements in working capital and timing of income tax payments
- Aggressively reduced costs by approximately $400 million year-on-year to help offset COVID-19 related impacts and actions
- Undertook restructuring actions as a result of the COVID-19 pandemic and related economic impact resulting in a $58 million charge
- Divested the drug delivery business, generating a pre-tax gain of $387 million
- Strengthened the balance sheet by reducing net debt by $1.7 billion since March 31, 2020
Guidance Remains Withdrawn;
July 2020 Sales Trends Due to the continued evolving and uncertain impact of the COVID-19 pandemic, 3M is not able to estimate the full duration, magnitude and pace of recovery across its diverse end markets with reasonable accuracy. Therefore, 3M continues to believe it is prudent to not provide guidance. The company is seeing broad-based sales improvements across businesses and geographies to start the third quarter. With one week left in July, total company sales are currently up low-single digits year-on-year. 3M will maintain its monthly reporting of sales information during the third-quarter to provide transparency on its ongoing business performance.
3M (NYSE:MMM) stock price history
The image below, obtained from Google, shows the stock price history of 3M (NYSE:MMM) for the last 5 years. And it's been a very average time for 3M stockholders. 5 years ago 3M's stock was trading at around $148 and its currently trading at $150.47 a stock. That is a very flat return of 4.5% provided to 3M's stock price over the last 5 years.
The stock of 3M is trading at close to the midpoint between its 52 week low and 52 week high which to us is a clear indication that the short term sentiment and momentum of 3Ms stock is neutral at this point in time.
The stock of 3M is trading at close to the midpoint between its 52 week low and 52 week high which to us is a clear indication that the short term sentiment and momentum of 3Ms stock is neutral at this point in time.
3M (MMM) stock vs Danaher (DHR) stock performance over the last 5 years
The image below shows the stock price performance of 3M (MMM) and Danaher (DHR) over the last 5 years. While they are both large manufacturing companies the stock price performance of these two firms are totally different:
The stock of Danaher (DHR) has easily outperformed the stock of 3M.
- 3M (MMM): 4.57%
- Danaher (DHR): 130.4%
The stock of Danaher (DHR) has easily outperformed the stock of 3M.
Recent coverage of 3M (MMM)
The extract below discusses 3M in more detail as obtained from
Shares of 3M Co. MMM, -1.08% dropped 2.2% in premarket trading Tuesday, after the diversified maker of health care, consumer and industrial products reported second-quarter profit and sales that missed expectations, as results were "significantly impacted" by the COVID-19 pandemic. Net income rose to $1.29 billion, or $2.22 a share, from $1.13 billion, or $1.92 a share, in the year-ago period. Excluding non-recurring items, adjusted earnings per share fell 16% to $1.78, below the FactSet consensus of $1.81. Sales dropped 12% to $7.18 billion, missing the FactSet consensus $7.32 billion. Safety and industrial sales declined 9.2% to $2.7 billion, above the FactSet consensus of $2.62 billion; health care sales slipped 0.4% to $1.8 billion to miss expectations of $1.95 billion; transportation and electronics sales dropped 20.9% to $1.9 billion to miss expectations of $1.97 billion; and consumer sales fell 6.2% to $1.2 billion, in line with expectations of $1.22 billion. The company said it is still not able to provide financial guidance given uncertainties related to the COVID-19 pandemic. For July to date, 3M said sales are tracking up in the low-single digit percentage range from last year. The stock has lost 7.5% year to date through Monday, while the Dow Jones Industrial Average DJIA, +0.43% has slipped 6.9%. (This replaces an earlier item that incorrectly reported the relationship between reported safety and industrial sales and analyst expectations).
Read the full article here
Shares of 3M Co. MMM, -1.08% dropped 2.2% in premarket trading Tuesday, after the diversified maker of health care, consumer and industrial products reported second-quarter profit and sales that missed expectations, as results were "significantly impacted" by the COVID-19 pandemic. Net income rose to $1.29 billion, or $2.22 a share, from $1.13 billion, or $1.92 a share, in the year-ago period. Excluding non-recurring items, adjusted earnings per share fell 16% to $1.78, below the FactSet consensus of $1.81. Sales dropped 12% to $7.18 billion, missing the FactSet consensus $7.32 billion. Safety and industrial sales declined 9.2% to $2.7 billion, above the FactSet consensus of $2.62 billion; health care sales slipped 0.4% to $1.8 billion to miss expectations of $1.95 billion; transportation and electronics sales dropped 20.9% to $1.9 billion to miss expectations of $1.97 billion; and consumer sales fell 6.2% to $1.2 billion, in line with expectations of $1.22 billion. The company said it is still not able to provide financial guidance given uncertainties related to the COVID-19 pandemic. For July to date, 3M said sales are tracking up in the low-single digit percentage range from last year. The stock has lost 7.5% year to date through Monday, while the Dow Jones Industrial Average DJIA, +0.43% has slipped 6.9%. (This replaces an earlier item that incorrectly reported the relationship between reported safety and industrial sales and analyst expectations).
Read the full article here
3M (NYSE:MMM) latest stock valuation
So based on the 2nd quarter 2020 earnings report what do we value 3M stock at? Based on the earnings report released by the group our valuation model provides a target price (full value price) for 3M at $154.10 a stock . We therefore believe the stock of 3M is fully valued.
We suggest long term fundamental and value investors look to enter the stock at least 10% below our current target price (full value price) of $154.10. Therefore we believe a good entry point into 3M is at $138.70 or below. We expect the stock of 3M to trade in a narrow range around its current price in coming weeks and months.
We suggest long term fundamental and value investors look to enter the stock at least 10% below our current target price (full value price) of $154.10. Therefore we believe a good entry point into 3M is at $138.70 or below. We expect the stock of 3M to trade in a narrow range around its current price in coming weeks and months.
Next earnings release of 3M
It is expected that 3M will release their 3rd quarter 2020 earnings in October 2020