MMM - Embedded Expectations Analysis - 2021 10 21
3M Company (MMM:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 19.3x Uniform P/E. At these levels, the market is pricing in profitability to remain stable, but management may have concerns about input cost increases, organic growth, and their margins.Specifically, management may have concerns about the pace of improvement for the global economy, the lag between input cost increases and their pricing actions, and the challenges in year-over-year comps. Furthermore, they may lack confidence in their ability to expand margins while investing in the business, sustain lower discretionary expenses, and sustain Safety and Industrial quarterly operating income. Also, they may lack confidence in their ability to maintain stationery and office supply organic growth, and drive SG&A efficiency. Finally, they may be overstating the potential of their M&A pipeline and they may be concerned about the sustainability of post-pandemic respirator demand.
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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