3M Company (MMM) Buy or Sell Stock Guide
Are you looking for the analysis of 3M Company (MMM) stock? Are you wondering what the bulls and the bears say about it?
If so, you came to the right place. In this stock guide, we will share with you 5 reasons to buy and 9 reasons to sell MMM stock. You’ll get a perspective on what the bulls and the bears say about it.
The analysis below may be also helpful to you if you have any of the following questions about MMM stock:
- Is MMM a buy or a sell?
- Should I sell or hold MMM stock today?
- Is MMM a good buy / investment?
- What are MMM analyst opinions, recommendations and ratings?
Let’s start with the bull case. Here are the reasons to buy MMM stock:
1. 3M has a long history of returning capital to shareholders, having paid dividends without interruption for 100 years and recently announcing accelerated rates of dividend growth and share buybacks.
2. 3M generates strong profitability with only modest capital intensity. The firm has enjoyed ROICs (including goodwill) north of our estimated cost of capital over the past decade, even during the recent recession.
3. Consumables represent about 50% of 3M's product portfolio, giving the company healthy profitability and less exposure to the volatile industrial capital spending cycle.
4. MMM forward dividend yield is 2.76%, higher than the industry (0.62%) and sector (0.45%) forward dividend yields. See MMM forward dividend chart.
5. MMM forward P/E ratio is 18.46, and it’s low compared to its industry peers’ P/E ratios. See MMM forward P/E ratio chart.
Now that you understand the bull case, let’s look at the reasons to sell MMM stock (i.e., the bear case):
1. 3M's participation in many end markets is both a help and a hindrance. Diversification mitigates risk, but also makes it difficult to grow at a rate different from global GDP.
2. 3M may be increasing leverage and cash outflows at the top of a cycle, a decision that may prove painful and limiting if global economic growth materially slows.
3. Growing exposure to emerging markets increases currency risk and could heighten competition from foreign competitors over time. This could make it difficult for 3M to gain share at historical levels of profitability.
4. MMM stock price ($213.53) is close to the 52-week high ($215.90). Perhaps now is a good time to sell? See MMM price chart.
5. MMM quarterly revenue growth was -0.60%, lower than the industry and sector average revenue growth (5.29% and 4.74%, respectively). See MMM revenue growth chart.
6. MMM profitability is declining. The YoY profit margin change was -1.43pp. See MMM profitability chart.
7. MMM Price/Book ratio is 12.47, and it’s high compared to its industry peers’ P/B ratios. See MMM forward Price/Book ratio chart.
8. MMM average analyst price target ($206.81) is below its current price ($213.53). See MMM price target chart.
9. MMM short interest (days to cover the shorts) ratio is 4.04. The stock garners more short interest than the average industry, sector or S&P 500 stock. See MMM short interest ratio chart.
Now let's look at the key statistics for MMM:
|Average Price Target / Upside||$206.81 / 8.43%|
|Average Analyst Rating||Hold|
|Number of Employees||93,516|
|Forward P/E Ratio||19.28|
|YoY Quarterly Revenue Growth||-0.6%|
What are your thoughts on MMM?
If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.