3M Stocks to Trade Higher After Q4?

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3M company (NYSE: MMM) is expected to report its fourth quarter 2022 results on Tuesday, January 24. We expect the company to post sales and earnings slightly above street expectations. The company should benefit from steady demand for its healthcare and consumer offerings. However, a continued decline in demand for respirators and the strengthening US dollar are likely to weigh on overall revenue and profit growth. We expect MMM shares to move higher after the Q4 results. In addition, our forecast indicates that MMM stocks have more room for growth, as discussed below. Our interactive dashboard analysis of the 3M profit example has additional details.

(1) Expected revenues will exceed consensus estimates

  • Trefis estimates 3M’s fourth quarter 2022 revenues at approximately $8.2 billion, reflecting a mid-single-digit year-over-year decline, but above the consensus estimate of $8.0 billion.
  • 3M should benefit from better price realization. However, lower demand for respirators, an appreciation of the US dollar, ongoing supply chain disruptions and slowing economic growth are likely to weigh on overall sales growth.
  • Looking back to the third quarter of 2022, revenues were down 4% yoy to $8.6 billion, with declines across all segments.
  • Our dashboard on 3M’s earnings provides details about the company’s segments.

(2) EPS will likely be above consensus estimates

  • 3M’s adjusted earnings per share for the fourth quarter of 2022 are expected to be $2.40 according to the Trefis analysis, compared to the $2.37 consensus estimate and the $2.31 figure the company reported in the same quarter. reported last year.
  • 3M’s adjusted net income of $1.5 billion in the third quarter of 2022 was up 1% yoy, primarily due to a 40 basis point increase in the company’s operating margins.
  • However, the company expects a $100-$150 million headwind in the fourth quarter from high raw material and logistics costs.
  • For the full year 2023, we expect adjusted earnings per share to be higher at $10.51, compared to $10.12 in 2021 and an estimated $10.22 in 2022.

(3) MMM stocks have more room for growth

  • We estimate 3M’s rating about $142 per share, which is about 20% higher than the current market price of $118.
  • At current levels, 3M stock is trading at just 11x its projected earnings per share of $10.51 in 2023, compared to its latest three-year average of 18x, implying that MMM stock has plenty of room for growth.
  • In addition, if the company reports optimistic Q4 results and offers a better 2023 outlook than street estimates, the P/E multiple will likely be revised upwards, resulting in higher levels for MMM stocks.
  • Note: P/E multiples are based on year-end stock price and reported (or expected) earnings for the full year

While MMM stock looks like it has a little more room for growth, it’s helpful to see how Colleagues from 3M rate on metrics that matter. Other valuable comparisons for companies in different industries can be found at Peer comparisons.

In addition, the Covid-19 crisis has led to many price discontinuities which can provide attractive trading opportunities. For example, you’d be surprised how counterintuitive stock valuation is 3M vs. AGCO

AGCO
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With inflation rising and the Fed raising rates, among other things, MMM stock is down 32% over the past 12 months. Can it go down even more? See how low 3M stock can go by comparing its fall to previous market crashes. Here’s a performance summary of all stocks in previous market crashes.

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