Conservative · Stocks to Consider and Updates

3M Co. Delivers Strong Results; Improves Outlook

Shares of diversified manufacturer 3M Co. (NYSE: MMM – $238.21) are climbing 7.6% in today’s trading as the company announced better-than-expected across-the-board financial results, and upped both its top- and bottom-line guidance. Specifically, share earnings easily surpassed expectations, coming in at $2.33, 8% higher than the year-earlier tally, and $0.12 above where analysts were anticipating. Sales improved 6%, to $8.2 billion, well ahead of the consensus estimate of $7.9 billion. Meanwhile, the operating margin appears to have remained on the upswing, highlighting management’s ability to keep costs in check.

       The company reported sales growth in each of its five business segments, despite divestitures and currency headwinds. Electronics and Energy posted the biggest sales gain (+10.6%), with strength in electronic-related sales. Geographically, sales growth was strongest in the Asia/Pacific region, increasing 9.7% vs a 1% rate in the United States. Management said that it now anticipates earnings of $9.00-$9.10 a share for the full year, well above its earlier $8.80-$9.05 range and the $8.96 forecast on the Street. The company also raised its organic local-currency sales growth estimate to 4%-5%, from its prior 3%-5% outlook.

       This stock has been on a good run since the start of the year, and has set a new high-water mark. MMM still holds investment appeal, especially for risk-averse accounts. Its dividend, yielding 2.1%, helps to sweeten the pot as does the company’s healthy balance sheet and strong cash flow generation.

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