3M (MMM) earnings release for the 4th quarter of their 2020 fiscal year
The 3M team delivered a strong fourth quarter with organic growth across all business groups, robust cash flow and a double-digit increase in earnings per share," said Mike Roman, 3M chairman and chief executive officer. "In an uncertain economic environment, we stayed focused on innovating for our customers, improving our operational execution and fighting the pandemic from every angle"
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 & Industrial With Leading Market Positions In:
Transportation & Electronics With Leading Market Positions In:
Health Care With Leading Market Positions In:
Consumer With Leading Market Positions In:
Safety & Industrial With 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 & Electronics With 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 Care With 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
Consumer With 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 4th quarter 2020 earnings report
The data provided below refers to the latest quarter's data unless specified otherwise
- Net sales: $8.58 billion (up from $8.111 billion from the same quarter of the previous year)
- Net sales increased by 5.8 % over the last 12 months
- Operating expenses: $6.73 billion (down from $6.786 million for the same quarter of the previous year)
- Cost of sales decreased by -0.76% over the last 12 months
- Net income: $1.389 billion (up from $969 million for the same quarter of the previous year)
- Diluted earnings per share: $2.38 (up from $1.66 for the same quarter of the previous year)
- PE ratio of 3M: 18.9
- Diluted weighted-average shares outstanding: 584 million (up from 582.7 million for the same quarter of the previous year)
- Cash and cash equivalents: 4.634 billion
- Cash and cash equivalents per share: $7.94
- Cash and cash equivalents makes up 4.5% of 3M's market capital
- Cash and cash equivalents makes up 9.9% of 3M's current assets
- Inventories: $4.239 billion
- Inventories makes up 8.9% of 3M's total assets
- Stockholders equity of 3M: $12.93 billion
- Stockholders equity per share: $22.1
- So 3M is trading at 7.96 times its stockholders equity per share which is well outside the expected range of between 2 and 5 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 4.1
- Cash generated from operations : $8.113 billion
- Cash generated from operations per share for the year: $13.90
3M's management commentary on their 4th quarter 2020 earnings report
ST. PAUL, Minn., Jan. 26, 2021 /PRNewswire/ -- 3M (NYSE: MMM) today reported fourth-quarter and full-year 2020 results and provided its 2021 financial outlook.
"The 3M team delivered a strong fourth quarter with organic growth across all business groups, robust cash flow and a double-digit increase in earnings per share," said Mike Roman, 3M chairman and chief executive officer. "In an uncertain economic environment, we stayed focused on innovating for our customers, improving our operational execution and fighting the pandemic from every angle."
"Throughout 2020 we distributed two billion respirators globally and supported the development and manufacturing of vaccines and therapeutics to help the world respond to COVID-19," Roman continued. "We also took significant actions to transform and build 3M for the future, while advancing our core values. Moving forward we will continue to prioritize investments in growth, productivity and sustainability as we build on our progress and deliver strong results in 2021."
"The 3M team delivered a strong fourth quarter with organic growth across all business groups, robust cash flow and a double-digit increase in earnings per share," said Mike Roman, 3M chairman and chief executive officer. "In an uncertain economic environment, we stayed focused on innovating for our customers, improving our operational execution and fighting the pandemic from every angle."
"Throughout 2020 we distributed two billion respirators globally and supported the development and manufacturing of vaccines and therapeutics to help the world respond to COVID-19," Roman continued. "We also took significant actions to transform and build 3M for the future, while advancing our core values. Moving forward we will continue to prioritize investments in growth, productivity and sustainability as we build on our progress and deliver strong results in 2021."
2020 Overview: Helping the world recover, building a better company, and positioning for growth
When the world needed 3M in 2020, we were there: fighting the pandemic from all angles, making and delivering more personal protective equipment than ever before, helping speed development of vaccines and therapeutics, and providing our expertise to governments around the world to manage pandemic response.
In addition, 3M forged partnerships with the U.S., Canada, Germany, and Singapore governments to create additional respirator manufacturing capacity. 3M applied its expertise to ensure business continuity and maintain strong customer service as market demand and government mandates rapidly shifted the flow of global supplies.
While stepping up its efforts to support pandemic care and recovery, 3M continued to deliver for customers: providing innovative solutions across our industry-leading businesses to improve health care, transportation and electronics, safety and industrial, and consumer products. At the same time, the company enhanced its financial flexibility with strong cash flow generation, aggressive cost reductions, and adjusted capital allocation plans.
The company's investments focused on building a better 3M that will be more efficient, effective, and connected to customers. As end markets have changed, 3M is well positioned take advantage of attractive global trends in personal safety, home improvement, e-commerce, automotive, and healthcare.
Stepping up our leadership in ESG
3M is expanding its commitments to improving the communities that it operates in and serves. In 2021, as part of the company's ongoing environmental stewardship, and as part of its 2021 capital expenditure plan, 3M expects to invest $100 million to further reduce water usage and improve water quality around its manufacturing locations.
Last year also marked a step forward for 3M's efforts to advance diversity, equity, and inclusion – the company introduced platforms for change to address racial opportunity gaps, empowering an inclusive culture, and supporting our communities with a plan to invest $50 million to advance workforce development and STEM education initiatives. In February, the company plans to publish its first Diversity, Equity and Inclusion report and outline its commitment to improving representation of minorities at the company.
When the world needed 3M in 2020, we were there: fighting the pandemic from all angles, making and delivering more personal protective equipment than ever before, helping speed development of vaccines and therapeutics, and providing our expertise to governments around the world to manage pandemic response.
In addition, 3M forged partnerships with the U.S., Canada, Germany, and Singapore governments to create additional respirator manufacturing capacity. 3M applied its expertise to ensure business continuity and maintain strong customer service as market demand and government mandates rapidly shifted the flow of global supplies.
While stepping up its efforts to support pandemic care and recovery, 3M continued to deliver for customers: providing innovative solutions across our industry-leading businesses to improve health care, transportation and electronics, safety and industrial, and consumer products. At the same time, the company enhanced its financial flexibility with strong cash flow generation, aggressive cost reductions, and adjusted capital allocation plans.
The company's investments focused on building a better 3M that will be more efficient, effective, and connected to customers. As end markets have changed, 3M is well positioned take advantage of attractive global trends in personal safety, home improvement, e-commerce, automotive, and healthcare.
Stepping up our leadership in ESG
3M is expanding its commitments to improving the communities that it operates in and serves. In 2021, as part of the company's ongoing environmental stewardship, and as part of its 2021 capital expenditure plan, 3M expects to invest $100 million to further reduce water usage and improve water quality around its manufacturing locations.
Last year also marked a step forward for 3M's efforts to advance diversity, equity, and inclusion – the company introduced platforms for change to address racial opportunity gaps, empowering an inclusive culture, and supporting our communities with a plan to invest $50 million to advance workforce development and STEM education initiatives. In February, the company plans to publish its first Diversity, Equity and Inclusion report and outline its commitment to improving representation of minorities at the company.
3M (MMM) stock price chart over the last 5 years
The image below 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. Over the 5 year period the stock returned a very flat return of 11.5% to 3M's stockholders.
The stock of 3M is trading at closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of 3M's stock is positive at this point in time.
The stock of 3M is trading at closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of 3M's stock is positive 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 over the last 5 years
- Danaher (DHR): 169.9%
- 3M (MMM): 11.5%
The stock of Danaher (DHR) has easily outperformed the stock of 3M over the last 5 years
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 $155.90 a stock . We therefore believe the stock of 3M is overvalued.
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 $155.90. Therefore we believe a good entry point into 3M is at $140.30 or below.
We expect the stock of 3M to pull back from current levels to levels closer to our target 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 $155.90. Therefore we believe a good entry point into 3M is at $140.30 or below.
We expect the stock of 3M to pull back from current levels to levels closer to our target price in coming weeks and months.
Next earnings release of 3M (MMM)
It is expected that 3M will release their 1st quarter 2020 earnings report in late April 2021