Diversified manufacturer 3M Co. (NYSE: MMM – $177.34) announced its fourth-quarter had earned $1.88 a share, 13% better than a year ago and a penny above Street estimates. The top line was a similar story, with the 0.4% year-over-year advance topping Wall Street’s call. As was the case in the first three quarters of 2016, the share-earnings improvement was largely driven by aggressive stock repurchases. In fact, on an apples-to-apples basis, earnings advanced a much more moderate 2% in the December quarter. Meanwhile, strict cost management continued to lend a hand, with divestitures and layoffs helping trim operating costs by 2.3%. Revenue was in line with estimates at $7.33 billion as currency headwinds and the sale of businesses added to the problems of still sluggish organic local-currency growth. All told, the 0.4% uptick in sales was a product of a 1.6% organic local-currency increase, and a 0.8% and 0.4% respective drag by foreign currency translation and divestitures. From a business unit perspective, Industrial was the best performer, posting a 3.0% sales gain, followed by Safety and Graphics (+0.6%). Sales were down 1.0% for Electronics and Energy, 0.7% lower in the Consumer segment and dipped 0.1% in Health Care.
Looking ahead, management essentially kept intact its 2017 guidance. It looks for $8.45 to $8.80 a share in earnings and a 1% to 3% increase in organic local-currency sales, and within the consensus mean of $8.63. The shares are trading at a lofty price-to-earnings multiple of 20.5, but on a risk-adjusted basis, long-term positions can be held. The shares also provide a well-covered and growing dividend yielding 2.5%.