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3M Rises 15.8% YTD: Should You Buy the Stock Now or Wait?
MMM3M(MMM) ZACKS·2025-05-22 15:10

Core Viewpoint - 3M Company (MMM) has shown strong stock performance with a year-to-date increase of 15.8%, significantly outperforming the industry and S&P 500 [1] Stock Performance - 3M's stock closed at 149.40,nearingits52−weekhighof149.40, nearing its 52-week high of 156.35 and well above its low of 96.76[4]−Thestockistradingabovebothits50−dayand200−daymovingaverages,indicatingpositivemarketsentimentandstability[4]SegmentPerformance−TheSafetyandIndustrialsegmenthasseenstrongmomentum,particularlyinroofinggranules,industrialadhesives,andelectricalmarkets,withorganicsalesimprovingby2.596.76 [4] - The stock is trading above both its 50-day and 200-day moving averages, indicating positive market sentiment and stability [4] Segment Performance - The Safety and Industrial segment has seen strong momentum, particularly in roofing granules, industrial adhesives, and electrical markets, with organic sales improving by 2.5% year over year [7][8] - The Transportation and Electronics segment benefited from growth in the aerospace market, with revenues increasing in the low-double-digit range, while adjusted organic sales grew by 1.1% [9][10] Restructuring and Financial Health - 3M is implementing restructuring actions to streamline operations, which contributed to a 220 basis point increase in adjusted operating margin to 23.5% [11] - The company returned 396 million in dividends and 1.3billioninsharebuybacksinthefirstquarterof2025,withaplanned1.3 billion in share buybacks in the first quarter of 2025, with a planned 2 billion in share repurchases for the year [12] Return on Equity - 3M's trailing 12-month return on equity (ROE) stands at 96.2%, significantly higher than the industry average of 38.2%, indicating efficient use of shareholder funds [13] Challenges - The Consumer segment faced a 1.4% sales decline in the first quarter, attributed to weakness in retail markets [14] - 3M's long-term debt reached $12.3 billion, with a debt-to-capital ratio of 73.1%, higher than the industry average of 55.2% [15] - Ongoing litigations, including earplug lawsuits, may lead to additional financial burdens [16] Earnings Estimates - Earnings estimates for 2025 and 2026 have decreased by 0.8% and 0.1%, respectively, over the past 30 days [19] Valuation - 3M is trading at a forward P/E multiple of 18.93X, above its five-year median of 15.98X and the broader industry's multiple of 16.73X [20]