3M (MMM) Stock Analysis

3M Dividend

3M (MMM) has paid a dividend every year since 1918.

Current Dividend Annualized: $2.80

3M (MMM) Intrinsic Value – Margin of Safety Analysis            

(updated October 2024)

Normalized Diluted Earnings Per Share (TTM): $9.61
Free Cash Flow Per Share (TTM): $1.33
Cash Flow From Operations (CFO) Per Share (TTM): $3.58

Estimated Intrinsic Value: $107

Target Buy Price Based on Required Margin of Safety =  $89
(Required Margin of Safety Based On Risk Stability Grade:

A = 0%, B = 20%, C = 40%, D = 60%, F = 80%)

Target SELL Price Based on Estimated Intrinsic Value = $134
(Allow Overvaluation Adjusted by Risk Stability Grade:

A = 40%, B = 25%, C = 15%, D = 5%, F = 0%)

Risk / Stability Grade: B

A grade indicates a quality company with a strong balance sheet, high earnings quality, and a positive business environment. These stocks require the slimmest margin of safety within the stock universe.

B grade indicates a company with a good balance sheet, good earning quality, and a stable business environment. The margin of safety required should be greater than stocks with an A grade but less than the average stock.

C grade indicates a company with a sufficient balance sheet, at least average earnings quality, and a reasonably stable business environment. The margin of safety required is greater than A & B stocks, but less than D & F stocks.

D grade indicates a company in good standing but has issues that could affect its stability and long term risks. D rated stocks should require a large margin of safety when purchased.

F grade indicates a company with significant issues that are currently affecting its stability and long term risks. Require an extremely large margin of safety for F rated stocks when purchased.

Financial Risk Grade:  B

A grade indicates an extremely low probability of a dividend cut. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories.

B grade indicates a very low probability for a dividend cut.

C grade indicates a low probability for a dividend cut and/or average safety risk.

D grade indicates there are issues that should be considered concerning future dividend payments.

F grade indicates serious dividend safety risks. Investors should complete comprehensive due diligence before investing.

Business Quality Grade:  B

A grade indicates earnings quality is high or far above average.

B grade indicates earnings quality is good and/or above average.

C grade indicates earnings quality is acceptable or average.

D grade indicates earnings quality is poor and requires thoughtful due diligence.

F grade indicates the quality of the earnings is poor or far below average requiring serious due diligence.

Earnings Report: 9/30/24 

AAAMP Portfolios Position Disclosures:
Dividend Growth & Income (DGI) – None
Treasure Trove Dividend (TTD) – None
Global Dividend Value -(GDV) – None
Global Value (GV) – None
Global Value Aggressive (GVA) – None
Global Conservative Income (GCI) – None
Global Aggressive Income (GAI) – None 

Company Description

Sector: Industrials
Industry: Specialty Industrial Machinery

3M M is a multinational conglomerate that has operated since 1902, when it was known as Minnesota Mining and Manufacturing. The company is well known for its research and development laboratory and it leverages its science and technology across multiple product categories.

As of 2024, 3M is organized across three business segments: safety and industrial, transportation and electronics, and consumer. Nearly 50% of the company’s revenue comes from outside the Americas, with the safety and industrial segment constituting a plurality of net sales. Many of the company’s tens of thousands of products touch and concern a variety of consumers and end markets.

SWOT Analysis

Strengths

Strategic advantages include a strong brand, patents, technology, and being a low cost producer. Approximately 50% of 3M products are consumables, providing a less cyclical revenue stream to balance their portfolio.

3 M is known for innovation over decades due to their successful research and development. The company is well diversified in product offerings and geography, and has a long term record of growth. They have the infrastructure and proven ability to bring new products to market.

Weaknesses

Many 3M products have a low barrier to entry meaning the company has to be careful about pricing its products. With so many patents the company has to spend heavily on litigation.

Opportunities

3M is expanding rapidly in emerging markets. The company is good at making small acquisitions that propel growth and making high conviction, high probability investments. 

Threats

Product liability lawsuit settlements create a large risk to future cash flows. Product life cycles require the company to constantly innovate. Without innovation the company would not be able to make growth projections. Without its earnings and cash flow from healthcare (Solventium SOLV spin-off) 3M may grow slower. 

Disclaimer:
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.