Shares of 3M (MMM) fell in trading, despite the company reporting strong third-quarter results. The adhesives and industrial safety company’s adjusted Q3 earnings surged by 18% year-over-year to $1.98 per share, beating analysts’ consensus estimate of $1.90 per share.
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However, the company’s Q3 revenues inched by 0.4% year-over-year to $6.3 billion. This surpassed analysts’ expectations of $6.1 billion.
3M’s Layoffs and Spinoff Drive Profit Growth in Two Key Segments
3M is facing multiple challenges this year, including addressing legal liabilities and reducing supply-chain costs. Additionally, the company has been hit by declining consumer demand, particularly in China.
In response to these difficulties, 3M slashed thousands of jobs and spun off its healthcare business into a separate publicly listed company earlier this year to offset the slowdown in demand. As a result, 3M’s safety and industrial business and transportation and electronics business saw year-over-year organic revenue growth of 0.9% and 2%, respectively, in the third quarter. However, its consumer business continued to struggle, particularly in areas like packaging, home care, and auto care, where demand remained weak.
In fact, the company’s safety and industrial business posted revenues of $2.8 billion in the third quarter, comprising more than 30% of the company’s total revenues.
MMM Raises FY24 Earnings Outlook
Looking ahead, management now expects adjusted total sales to grow by around 1% year-over-year while adjusted earnings per share is expected to be in the range of $7.20 to $7.30. For reference, analysts were expecting an adjusted EPS of $7.30.
Is MMM a Good Buy Now?
Analysts remain sidelined about MMM stock, with a Hold consensus rating based on five Buys, five holds each and two Sells. Over the past year, MMM has increased by more than 90%, and the average MMM price target of $139.75 implies an upside potential of 3.6% from current levels. These analyst ratings are likely to change following MMM’s results today.
