3M (NYSE: MMM) earnings release for the 1st quarter of their 2020 fiscal year
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 1st quarter 2020 earnings report
The data provided below refers to the latest quarter's data unless specified otherwise
- Net sales: $8.075 billion (up from $7.837 billion from the same quarter of the previous year)
- Net sales increased by 2.7% 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 1st quarter 2020 earnings report
ST. PAUL, Minn. – April 28, 2020 − 3M (NYSE: MMM) today reported first-quarter 2020 results. “In this unprecedented time, I could not be more proud of how our 96,000 people have stepped up to help fight COVID-19, and I thank all 3Mers for their incredible efforts,” said Mike Roman, 3M chairman and chief executive officer. “We are attacking the pandemic from all angles, which includes mobilizing all of our resources and rapidly increasing output of critical supplies to healthcare workers and first responders.”
“Given the breadth and diversity of our businesses, the financial impact of COVID-19 is varying across 3M,” Roman continued. “In the first quarter we saw strong growth in personal safety, as well as in other areas of our portfolio experiencing high demand due to the pandemic. At the same time, we experienced weak demand in several end markets that were more severely impacted by actions taken around the world to slow the pandemic. Looking ahead, 3M is taking action that will help us navigate near-term uncertainty, generate strong cash flow, and lead out of the slowdown by delivering for employees, customers and shareholders.”
“Given the breadth and diversity of our businesses, the financial impact of COVID-19 is varying across 3M,” Roman continued. “In the first quarter we saw strong growth in personal safety, as well as in other areas of our portfolio experiencing high demand due to the pandemic. At the same time, we experienced weak demand in several end markets that were more severely impacted by actions taken around the world to slow the pandemic. Looking ahead, 3M is taking action that will help us navigate near-term uncertainty, generate strong cash flow, and lead out of the slowdown by delivering for employees, customers and shareholders.”
COVID-19 Response & Business Impact
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. Since the beginning of the year, 3M has continued to:
The COVID-19 pandemic is affecting 3M’s businesses in a number of ways. 3M has experienced strong endmarket demand, specifically in personal safety, home improvement, general cleaning, food safety and biopharma filtration. At the same time, several other end markets have experienced significant weakness due to social distancing and shelter-in-place mandates. These end markets include oral care, automotive OEM and aftermarket, general industrial, commercial solutions, and stationery and office.
The company is continuing to adapt quickly to the current environment, with a focus on mitigating the nearterm impact while positioning 3M’s businesses for success coming out of the crisis. Actions being taken include:
Withdrawing Full-Year Outlook
Due to the evolving and uncertain impact of the COVID-19 pandemic, 3M currently is not able to estimate the full duration, magnitude and pace of recovery across its diverse end markets with reasonable accuracy. Therefore, 3M believes it is prudent to withdraw its previously communicated full-year 2020 outlook, which was provided on January 28, 2020. The company will begin reporting monthly sales information starting in May to provide transparency on 3M’s 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. Since the beginning of the year, 3M has continued to:
- Lead in pandemic response
- Accelerated respirator production, including ramped up idle respirator lines
- Doubled global respirator output to 100 million/month (U.S. ~35 million/month)
- Increasing capital investment to double respirator output again
- Partnering to create innovative solutions to protect healthcare workers
- Prioritize supplies to the most critical areas
- Immediately redirected vast majority of global respirators output to healthcare
- Uniting with governments and distribution partners to expedite products to healthcare workers
- Closely collaborating with U.S. Administration, FDA, HHS, DoD and FEMA to import 166.5 million respirators into the U.S.
- Fight fraud and price gouging
- Working with distributors and governments to ensure secure supply chains
- 3M has not increased respirator prices as a result of the pandemic
- Published N95 respirator prices; created hotline for fraud and price gouging
- Working with national and local legal authorities to bring lawsuits in multiple states and Canada
- Support communities through aid for relief and recovery efforts
- Contributing $20 million in financial support to frontline healthcare workers, vulnerable populations disproportionately affected by the virus and medical research initiatives
The COVID-19 pandemic is affecting 3M’s businesses in a number of ways. 3M has experienced strong endmarket demand, specifically in personal safety, home improvement, general cleaning, food safety and biopharma filtration. At the same time, several other end markets have experienced significant weakness due to social distancing and shelter-in-place mandates. These end markets include oral care, automotive OEM and aftermarket, general industrial, commercial solutions, and stationery and office.
The company is continuing to adapt quickly to the current environment, with a focus on mitigating the nearterm impact while positioning 3M’s businesses for success coming out of the crisis. Actions being taken include:
- Protecting our employees
- Mobilized global crisis action team in January
- Updated safe workplace protocols globally, including work-from-home where possible o Implemented pandemic support programs
- Ensuring business continuity
- Maintaining strong customer service with new global Enterprise Operations organization
- Ongoing adjustments to operations, including targeted shutdowns due to weak customer/market demand or government mandates
- Targeted paid short-term furloughs in businesses most impacted
- Protecting financial flexibility
- Taking aggressive cost reductions while minimizing employee impact—estimated cost savings of $350 to $400 million in the second quarter of 2020 o Adjusting capital allocation plans—prioritizing organic investments and the dividend, and suspended share repurchase program
- Reduced full-year 2020 cap-ex plan to approximately $1.3 billion versus $1.6 to $1.8 billion, previously
- Added $1.75 billion of cash via March 2020 debt issuance o Continue to expect after-tax proceeds of $0.4 billion from closing of drug delivery divestiture in second quarter 2020
Withdrawing Full-Year Outlook
Due to the evolving and uncertain impact of the COVID-19 pandemic, 3M currently is not able to estimate the full duration, magnitude and pace of recovery across its diverse end markets with reasonable accuracy. Therefore, 3M believes it is prudent to withdraw its previously communicated full-year 2020 outlook, which was provided on January 28, 2020. The company will begin reporting monthly sales information starting in May to provide transparency on 3M’s 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's stockholders. 5 years ago 3M's stock was trading at around $148.90 and its currently trading at $156.51 a stock. That is a very flat return of 1% provided by 3Ms 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 3M's 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 3M's stock is neutral at this point in time.
Google Trends for 3M stock price
The graphic below shows the trend in the search results for 3M stock price over the last 12 months. And searches for 3M stock price spiked in the week towards the end of March 2020.
Recent coverage of 3M
The extract below discusses 3M in more detail as obtained from TheStreet.com
3M Co. (MMM) - Get Report posted stronger-than-expected first quarter earnings Tuesday, while pulling its full-year profit guidance and cutting its capital expenditure plans amid the coronavirus uncertainty.
3M said earnings for the three months ending in March were pegged at $2.16 per share, down 2.7% from the same period last year and 13 cents ahead of the Street consensus forecast. Group revenues, 3M said, rose 3% to $8.1 billion, again topping analysts' estimates of a $7.9 billion tally.
The group also said it was cutting its full-year capital expenditure plans, but will keep its cash dividend in place. It will, however, suspend its share buyback plans and scrap its 2020 profit forecast.
“Given the breadth and diversity of our businesses, the financial impact of COVID-19 is varying across 3M,” said CEO Mike Roman. “In the first quarter we saw strong growth in personal safety, as well as in other areas of our portfolio experiencing high demand due to the pandemic."
"At the same time, we experienced weak demand in several end markets that were more severely impacted by actions taken around the world to slow the pandemic," he added. "Looking ahead, 3M is taking action that will help us navigate near-term uncertainty, generate strong cash flow, and lead out of the slowdown by delivering for employees, customers and shareholders.”
Read the full article here
3M Co. (MMM) - Get Report posted stronger-than-expected first quarter earnings Tuesday, while pulling its full-year profit guidance and cutting its capital expenditure plans amid the coronavirus uncertainty.
3M said earnings for the three months ending in March were pegged at $2.16 per share, down 2.7% from the same period last year and 13 cents ahead of the Street consensus forecast. Group revenues, 3M said, rose 3% to $8.1 billion, again topping analysts' estimates of a $7.9 billion tally.
The group also said it was cutting its full-year capital expenditure plans, but will keep its cash dividend in place. It will, however, suspend its share buyback plans and scrap its 2020 profit forecast.
“Given the breadth and diversity of our businesses, the financial impact of COVID-19 is varying across 3M,” said CEO Mike Roman. “In the first quarter we saw strong growth in personal safety, as well as in other areas of our portfolio experiencing high demand due to the pandemic."
"At the same time, we experienced weak demand in several end markets that were more severely impacted by actions taken around the world to slow the pandemic," he added. "Looking ahead, 3M is taking action that will help us navigate near-term uncertainty, generate strong cash flow, and lead out of the slowdown by delivering for employees, customers and shareholders.”
Read the full article here
3M (NYSE:MMM) latest stock valuation
So based on the 2nd quarter 2019 earnings report and fiscal guidance of 3M 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 $152.70 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 $152.70. Therefore we believe a good entry point into 3M is at $137.40 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 $152.70. Therefore we believe a good entry point into 3M is at $137.40 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 2nd quarter 2020 earnings in July 2020