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1. Company Snapshot

1.a. Company Description

3M Company operates as a diversified technology company worldwide.It operates through four segments: Safety and Industrial; Transportation and Electronics; Health Care; and Consumer.The Safety and Industrial segment offers industrial abrasives and finishing for metalworking applications; autobody repair solutions; closure systems for personal hygiene products, masking, and packaging materials; electrical products and materials for construction and maintenance, power distribution, and electrical original equipment manufacturers; structural adhesives and tapes; respiratory, hearing, eye, and fall protection solutions; and natural and color-coated mineral granules for shingles.


The Transportation and Electronics segment provides ceramic solutions; attachment tapes, films, sound, and temperature management for transportation vehicles; premium large format graphic films for advertising and fleet signage; light management films and electronics assembly solutions; packaging and interconnection solutions; and reflective signage for highway, and vehicle safety.The Healthcare segment offers food safety indicator solutions; health care procedure coding and reimbursement software; skin, wound care, and infection prevention products and solutions; dentistry and orthodontia solutions; and filtration and purification systems.The Consumer segment provides consumer bandages, braces, supports and consumer respirators; cleaning products for the home; retail abrasives, paint accessories, car care DIY products, picture hanging, and consumer air quality solutions; and stationery products.


It offers its products through e-commerce and traditional wholesalers, retailers, jobbers, distributors, and dealers.The company was founded in 1902 and is based in St. Paul, Minnesota.

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1.b. Last Insights on MMM

3M's recent performance is driven by strong Q3 earnings, with earnings and sales gains across all segments, and a raised 2025 outlook. The company's restructuring efforts have delivered richer margins and growth opportunities, with new product launches expected to drive +15% YoY sales growth. Improved pricing power, streamlined operations, and expanded machine utilization have also contributed to the positive momentum. Additionally, 3M's Q3 results have led analysts to boost their forecasts, and the company's business recovery is in full swing, with legacy issues largely behind it.

1.c. Company Highlights

2. 3M's Q3 Earnings: A Strong Performance

3M's Q3 performance was impressive, with organic sales growth of 3.2%, marking the fourth consecutive quarter of positive growth across all business groups. The company's operating margins rose 170 basis points, with earnings per share up 10% to $2.19, beating analyst estimates of $2.07. Free cash flow was $1.3 billion, a conversion of 111%. The strong performance enabled an increase in earnings per share guidance to $7.95-$8.05 and an expectation of full-year organic sales growth greater than 2%.

Publication Date: Nov -25

📋 Highlights
  • Organic Sales & Margin Growth:: 3.2% organic sales growth for Q3, with operating margins rising 170 bps and EPS up 10% to $2.19.
  • New Product Momentum:: 70 new products launched in Q3 (196 YTD), up 70% YoY, driving 30% Q3 sales growth from 5-year-old products.
  • Shareholder Returns:: $900M returned to shareholders in Q3 ($3.9B YTD), including $500M in share repurchases and $400M in dividends.
  • 2025 Guidance Update:: Organic growth >2%, 180-200 bps margin expansion, and $7.95-$8.05 EPS target, with free cash flow conversion >100%.

Business Group Performance

The Safety and Industrial business group grew 4.1%, driven by commercial excellence and new product introductions. The Transportation and Electronics business group grew 3.6%, with electronics revenue growing mid-single digits in Q3, driven by adhesives and films, polarizers for notebooks, tablets, PCs, and cell phones. The Consumer segment grew 0.3%, with margins driven by good execution, SKU rationalization, and new product launches.

New Product Introductions and R&D

3M launched 70 new products in Q3 and 196 year-to-date, both up about 70% versus last year. Sales from products launched in the last 5 years were up 30% in Q3 and 16% year-to-date. The company's CEO, William Brown, attributes the success in new product introductions to a cultural shift, investments, and different metrics, with a focus on growing $1 billion over the macro, with half coming from new product introductions.

Valuation and Returns

With a P/E Ratio of 26.84 and an EV/EBITDA of 15.5, the market is pricing in a certain level of growth. The company's ROIC is 13.06%, indicating a strong return on invested capital. The ROE is 78.98%, which is unusually high and may not be sustainable. The Dividend Yield is 1.72%, providing a relatively stable source of return.

Guidance and Outlook

3M updated its 2025 guidance, expecting organic growth over 2%, operating margin expansion of 180-200 basis points, and earnings per share growth of 10%. The company expects high single-digit EPS growth for 2026 and 2027, with a plan to offset tariff headwinds and stranded costs with productivity savings and volume growth. Analysts estimate next year's revenue growth at 3.3%, which is slightly higher than the company's guidance.

Divestitures and Restructuring

The company made progress with an agreement to sell its precision grinding and finishing business within its SIBG abrasive division, expected to be accretive to earnings. 3M is embarking on a longer-term, more thoughtful redesign of its manufacturing, distribution, and business process services network, with a series of actions over time, aligned with the company's long-term growth agenda.

3. NewsRoom

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3M Company (MMM) Presents at Goldman Sachs Industrials and Materials Conference 2025 Transcript

Dec -04

Source: seekingalpha.com

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3M Expands Margins While Honeywell Absorbs Restructuring Pressure

Dec -03

Source: 247wallst.com

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Scotch Brand partners with Ego Nwodim to inspire joyful holiday gifting

Dec -02

Source: prnewswire.com

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3M's Transportation and Electronics Growth Picks Up: More Upside to Come?

Nov -28

Source: zacks.com

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Blue-Chip Stock Could Surge to Highest Level Since 2019

Nov -26

Source: schaeffersresearch.com

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3M Announces Upcoming Investor Event

Nov -20

Source: prnewswire.com

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3M Company (NYSE:MMM) Given Consensus Rating of “Moderate Buy” by Analysts

Nov -15

Source: defenseworld.net

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4 Stocks to Add to Your Portfolio as Dow Hits All-Time Closing High

Nov -13

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.74%)

6. Segments

Safety and Industrial

Expected Growth: 4.5%

3M's Safety and Industrial segment growth is driven by the adoption of personal protective equipment and increased demand for industrial adhesives and abrasives, particularly in the automotive and electronics industries.

Transportation and Electronics

Expected Growth: 5.2%

Strong demand from automotive and electronics industries, driven by increasing adoption of electric vehicles and growth in 5G infrastructure, will fuel segment growth for 3M’s Transportation and Electronics segment.

Consumer

Expected Growth: 4.5%

3M’s diverse portfolio of everyday products, such as adhesives, Scotch Tape, and Filtrete air filters, drives growth. Strong brand recognition and continuous innovation in categories like home improvement and healthcare are key fundamental drivers.

Corporate and Other

Expected Growth: 4.3%

Driven by 3M’s continued investment in research and development, the Corporate and Other segment is expected to grow, fueled by the company’s efforts to drive innovation and improve operational efficiency.

Other

Expected Growth: 4.5%

3M's miscellaneous segment is driven by its industrial and commercial solutions, with growth fueled by increasing demand for safety, electronics, and healthcare products.

7. Detailed Products

Adhesives

A wide range of adhesives for industrial, commercial, and consumer applications

Abrasive Systems

Abrasive products for grinding, cutting, and finishing applications

Advanced Ceramics

Ceramic materials for industrial, automotive, and electronic applications

Electronics Materials

Materials and components for electronic devices and circuits

Filtek Dental Products

Dental restorative materials and equipment

Health Care Products

Medical supplies and equipment for wound care, oral care, and drug delivery

Industrial Tapes

Adhesive tapes for industrial, commercial, and consumer applications

Littmann Stethoscopes

High-quality stethoscopes for medical professionals

Occupational Health and Environmental Safety

Personal protective equipment and safety products

Office Supplies

Office products such as Post-it Notes, Scotch Tape, and Scotch-Brite cleaning products

Personal Care Products

Oral care, skin care, and wound care products for consumers

Thinsulate Insulation

Thermal insulation materials for clothing, footwear, and industrial applications

8. 3M Company's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for 3M Company is medium due to the presence of alternative products and services in the market. However, 3M's strong brand reputation and diversified product portfolio mitigate this threat to some extent.

Bargaining Power Of Customers

The bargaining power of customers for 3M Company is low due to the company's strong brand reputation and diversified product portfolio, which reduces the negotiating power of customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for 3M Company is medium due to the presence of multiple suppliers in the market. However, 3M's strong relationships with its suppliers and its diversified supply chain mitigate this threat to some extent.

Threat Of New Entrants

The threat of new entrants for 3M Company is low due to the high barriers to entry in the industry, including high capital requirements and the need for specialized technology and expertise.

Intensity Of Rivalry

The intensity of rivalry for 3M Company is high due to the presence of several established players in the industry, including competitors such as DuPont and BASF. This leads to a highly competitive market with intense price competition and advertising wars.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 77.81%
Debt Cost 7.74%
Equity Weight 22.19%
Equity Cost 9.15%
WACC 8.05%
Leverage 350.61%

11. Quality Control: 3M Company passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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TransDigm Group

A-Score: 6.4/10

Value: 3.0

Growth: 7.9

Quality: 6.7

Yield: 9.0

Momentum: 4.0

Volatility: 8.0

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PACCAR

A-Score: 6.0/10

Value: 3.7

Growth: 6.7

Quality: 6.1

Yield: 8.0

Momentum: 3.0

Volatility: 8.3

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Paychex

A-Score: 5.8/10

Value: 1.8

Growth: 5.8

Quality: 9.0

Yield: 6.0

Momentum: 3.0

Volatility: 9.3

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3M

A-Score: 5.1/10

Value: 1.9

Growth: 2.1

Quality: 5.8

Yield: 6.0

Momentum: 7.0

Volatility: 8.0

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Honeywell

A-Score: 5.1/10

Value: 3.0

Growth: 4.0

Quality: 6.0

Yield: 4.0

Momentum: 4.0

Volatility: 9.3

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Compass Diversified

A-Score: 4.4/10

Value: 7.4

Growth: 2.3

Quality: 4.5

Yield: 10.0

Momentum: 0.0

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

167.48$

Current Price

167.48$

Potential

-0.00%

Expected Cash-Flows