This firm’s recent healthcare division spinoff lets it concentrate on its core industrial and consumer products businesses. In fact, its history of innovation across product lines should position it to keep meeting evolving market needs.
All in all, recent developments have been positive for the company as its shares have rocketed 89.3% over the last year as compared to the S&P’s 34.8% return.
The stock trades at 19.5 times the company’s forward earnings forecast.
3M COMPANY (New York symbol MMM; www.3m.com) makes more than 55,000 items, including Post-it notes, Scotch tape, Scotch-Brite cleaning products, Scotchguard protection and Thinsulate insulation.
The company spun off its Health Care division as a separate firm called Solventum Corp. (New York symbol SOLV) on April 1, 2024. That business makes products to treat and prevent infection in wounds; it also manufactures dental filling materials, and filtration and purification products.
Investors received one share of Solventum for every four shares of 3M they held. 3M retained a 19.9% stake in the new firm, but it plans to sell those shares within five years.
3M’s remaining businesses makes a wide variety of industrial and consumer products, including Post-it notes, Scotch tape, Scotch-Brite cleaning products, Scotchguard fabric protection and Thinsulate insulation.
Dividend Stocks: 3M’s dividend payout cut should pay off for the long run
As a result of the spinoff, 3M cut your quarterly dividend by 53.6%. The new annual rate of $2.80 yields 1.9%. The lower dividend should be more sustainable given the decline in cash flow with the Solventum spinoff.
Meanwhile, if you adjust for the spinoff, 3M sales in the three months ended December 31, 2024, rose 2.2%, to $5.81 billion from $5.68 billion a year earlier. That beat the consensus forecast of $5.78 billion.
The higher sales are mainly due to rising demand for electronics used in vehicles and mobile phones.
Excluding unusual items, earnings fell 1.2%, to $1.68 a share from $1.70, due to a higher tax rate. Even so, the latest earnings still exceeded the $1.66 consensus estimate.
3M expects its sales for 2025 will rise between 2% and 3%. It also predicts its earnings will range from $7.60 to $7.90 a share. The stock trades at a reasonable 19.5 times the midpoint of that range.
Recommendation in Wall Street Stock Forecaster: 3M Company is a buy.
