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(Intrinsic Value Analysis For Over 300 Stocks)
3M (MMM) Stock Analysis
The 3M dividend has been paid continuously since 1916 and increased for 65 consecutive years; qualifying the company as a
Dividend King, Dividend Aristocrat, and Dividend Champion.
Current Dividend Annualized: $6.00
3M (MMM) Intrinsic Value – Margin of Safety Analysis
(updated November 2023)
Normalized Diluted Earnings Per Share (TTM): $-13.31
Free Cash Flow Per Share (TTM): $8.77
Cash Flow From Operations (CFO) Per Share (TTM): $11.95
Estimated Intrinsic Value: $142
Target Buy Price Based on Required Margin of Safety = $88
(Required Margin of Safety Based On Risk Stability Grade:
A = 10%, B = 20%, C = 40%, D = 60%, F = 80%)
Target SELL Price Based on Estimated Intrinsic Value = $149
(Allow Overvaluation Adjusted by Risk Stability Grade:
A = 20%, B = 15%, C = 10%, D = 5%, F = 0%)
Risk / Stability Grade: D
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: C
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: C
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: 9/30/23
AAAMP Portfolios Position Disclosures:
Dividend Growth & Income (DGI) – LONG
Treasure Trove Dividend (TTD) – LONG
Global Dividend Value -(GDV) – None
Global Conservative Income (GCI) – None
Global Value (GV) – None
Global Value Aggressive (GVA) – None
Global High Yield (GHY) – None
Industry: Specialty Industrial Machinery
3M 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 the firm leverages its science and technology across multiple product categories.
3M is organized into four business segments: safety and industrial, transportation and electronics, health care, and consumer. About 50% of the company’s revenue comes from outside the United States, with the safety and industrial segment constituting most of the firm’s net sales. Many of the company’s 60,000-plus products touch and concern a variety of consumers and end markets.
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.
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.
3M is expanding rapidly in emerging markets. The company is good at making small acquisitions that propel growth. Global fluctuations in input prices are trending in the company’s favor.
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. A softening of global economies and rising U.S. dollar could hurt earnings.
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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.