3M Stock To Trade Lower Post Q1?


POLAND - 02/07/2021: In this photo illustration, a 3M logo is also displayed on a smartphone screen ... Stock market graph in the background. (Photo illustration by Omar Marques / SOPA Images / LightRocket via Getty Images)

SOPA Images / LightRocket via Getty Images

3M Company MMM is expected to release its results for the first quarter of 2021 on Tuesday, April 27th. We anticipate that 3M is likely to be below expectations due to continued pressure on the automotive aftermarket, oral care business, and office supplies due to continued pressure on the automotive aftermarket, oral care business and office supplies during the pandemic. On the positive side, however, the company will continue to see higher demand for home improvement and security companies. Based on these trends, we expect the company to navigate well in the final quarter and see revenue and earnings growth year over year.

However, our forecast shows that 3M's valuation is around $ 196 per share, which is 3% below the current market price, meaning the stock appears to be fully valued at the current $ 202 level. Our interactive dashboard analysis on 3M's pre-earnings has additional details.

(1) The sales revenues are likely to be slightly below the consensus estimates

Trefis estimates 3M's revenue at around $ 8.4 billion in the first quarter of 2021, slightly below the consensus estimate of $ 8.5 billion. The gradual opening of economies and vaccination programs in the US has spurred industrial demand, which should be a good sign of overall sales growth for 3M in the short term. Looking back at the fourth quarter of 2020, revenue increased 5.8% year over year to $ 8.6 billion. Our dashboard on 3M's revenue provides more details on the company's segments.

2) The EPS should also be below the consensus estimates

3M's adjusted earnings per share for the first quarter of 2021 is projected to be $ 2.25 per Trefis analysis, slightly below the consensus estimate of $ 2.29. 3M's net income of $ 1.4 billion for the fourth quarter of 2020 reflected a 22% increase from $ 1.1 billion for the year-ago quarter. This is due to higher sales and improved margins due to a year-over-year decrease in SG&A and R&D expenses. However, 3M is expected to experience margin pressure in the first quarter due to the restructuring initiatives, including certain divestments, that the company made in the second half of 2020. For the full year of 2021, we expect adjusted earnings per share of $ 9.61 compared to $ 8.74 in 2020.

(3) Share price estimate slightly below the current market price

1619455153_673_3M-Stock-To-Trade-Lower-Post-Q1.jpg

Trefis price estimate for MMM Stock

Trefis

Pass ours Rating by 3MWith an adjusted EPS estimate of around $ 9.61 and a P / E multiple of around 20x in 2021, this equates to a price of $ 196, which is slightly below the current market price of around $ 202. The P / E multiple of 20x for 3M is slightly above 18 times that of 2018 and corresponds to 20 times that of 2019 and not until the end of 2020.

Although the ongoing challenges in the automotive aftermarket and office supplies, among others, will impact 3M's sales growth in the short term, we anticipate that the demand for personal safety and home improvement companies will continue to increase sharply in the short term. In addition, with the resumption of economic activity, the demand for 3M products for industrial use will also increase, which is a good sign of increased sales. However, we believe those factors are already factored into the current stock value of $ 202 per share, which means there isn't much room for growth for MMM stocks in the short term.

Note: The P / E ratio is based on the share price at the end of the year and the reported (or expected) result for the full year

While MMM stocks may be fully valued, 2020 has created many price discontinuities that can offer attractive trading opportunities. For example, you might be surprised at how counter-intuitive stock valuation is 3M vs. blurring.

See everything Trefis price estimates and Download Trefis data Here

What's behind Trefis? See how it enables new collaboration and what-if CFOs and finance teams | Product, R&D, and marketing teams


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