3M is a diversified company operating across electronics, telecommunications, industrial, office, health care, safety and consumer markets worldwide.
| Key Statistics | |||||||
| 52-Week Range | Avg. Daily Vol (3 Mo) | Market Value | Dividend Yield | Float % |
Target Price | Consensus Rating (5 strong buy – 1 strong sell) |
Next Earnings Announcement |
| 72.67 – 128.57 | 2,019,738 | 26,902.70 | – | 95,6% | 146,77 | 4.15 | 28/01/2021 |
3M offers some of the worlds most recognised products and brands including post-it notes, scotch tapes, scotchgard fabric protectors, scotch-brite scouring pads and ACE bandages. Products are distributed through wholesalers and retailers worldwide.
The company operates across four segments, safety & industrial, transportation & electronics, health care, and consumer. Safety & industrial consists of personal safety, adhesives and tapes, abrasives, closure and masking systems, electrical markets, automotive aftermarket, and roofing granules, and is the largest segment by revenue totalling 34.4% in 2019. Transportation & electronics focuses on electrioncs (display materials and systems, electronic materials solutions), automotive and aerospace, commercial solutions, advanced materials and transportation safety, totalling 28.5% of sales. Health care includes medical solutions and supplies, oral care, separation and purification sciences, health information systems, drug delivery systems, and food safety, totalling 22% of sales. Finally consumer products consist of home improvement, stationery and office supplies, and consumer health care, with some of 3M’s most recognisable brands including post-it notes and scotch tapes, totalling 15.1% of sales.
With operations in over 70 countries, 3M is a truly global company although the United States is the dominant market accounting for 40.9% of revenue followed by Asia Pacific 30.5%, Europe, Middle East & Africa 19.4% and Latin America & Canada 9.2%.
The impact on the corona virus has been substantial despite revenue shielded somewhat by 3M’s product diversity and leading position in respiratory masks and PPE more than offset by declines in automotive and industrial markets. Targeted 3-5% organic sales growth for the five years 2019 to 2023 may be unachievable given the impact for the pandemic, in combating this management has prioritised allocating capital to internal investments, with 30% of free cash flow earmarked for R&D capital spending, a further 40% for flexible deployment on M&A and share buybacks, and the remaining 30% for dividends. In the prior 3 years cash allocated for internal growth averaged 10% while M&A and buybacks averaged a 52% allocation.
For the financial year ended December 2020 revenue is forecast to edge -0.8% lower to US$31,864.6m before rising +5.4% in 2021 to US$33,596.4m. Adjusted earnings per share is forecast to decline -7.9% to US$8.54 in 2020 before rising +9.8% to US$9.37 in 2021. Based on these estimates the stock trades on forward P/E multiples of 20.8 and 18.9 respectively, a 26% and 23% discount to the peer group averages of 28.2 and 24.5 respectively.
The average target price of analysts covering the stock is $146.77 with 60% of analysts rating the stock as a buy, compared to 0% as a sell and 40% as a hold.
