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Valens Research

MMM - Embedded Expectations Analysis - 2019 05 28

3M Company (MMM:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with a 20.7x Uniform P/E. At these levels, markets have bullish expectations for the firm, but management has concerns about their segment sales growth, channel inventory levels, and the potential of their M*Modal acquisition.

Specifically, management may lack confidence in their ability to sustain Safety & Graphics and Electronics & Energy sales growth, particularly at Scott Safety, and maintain their Health Care segment performance across Asia Pacific and developing markets. In addition, they may be concerned about channel inventory changes across their supply chain, the potential return on capital of their M*Modal acquisition, and the impact of their ERP implementation. Finally, they may lack confidence in their ability to sustain volume growth, improve margins through SG&A management, and adjust their EMEA product portfolio.
Underlying
3M COMPANY

3M is a technology company. The company has four segments: Safety and Industrial, which consists of personal safety, industrial adhesives and tapes, abrasives, closure and masking systems, electrical markets, automotive aftermarket, and roofing granules; Transportation and Electronics, which consists of electronics, automotive and aerospace, commercial solutions, advanced materials, and transportation safety; Health Care, which includes medical solutions, oral care, separation and purification sciences, health information systems, drug delivery systems, and food safety; and Consumer, which consists of home improvement, stationery and office supplies, home care, and consumer health care.

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Valens Research
Valens Research

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