Title: Where's 3M Stock Headed Next?
3M (NYSE: MMM) recently shared its Q4'24 earnings, surpassing expectations with adjusted revenues of $5.81 billion and earnings per share of $1.68. The company's outlook for 2025 is optimistic, which positively impacted its stock. In the metals sector, check out why Wheaton Stock has Skyrocketed 29%.
Since the start of 2024, MMM's stock has soared by 66%, outperforming the 27% rise in the S&P500 index. In April 2024, 3M completed the spin-off of its healthcare business, Solventum, a move that benefited the company and its share price. Investors seeking growth with a smoother ride may want to consider the High-Quality Portfolio, which has surpassed the S&P's performance with over 91% returns since inception.
3M reported a 2.2% year-over-year increase in Q4 revenue, reaching $5.8 billion. The Transportation and Electronics segments saw a 1.1% rise in sales, while Safety & Industrial revenue climbed by 1.6%. The Consumer segment saw a humble 0.2% sales increase. Despite tepid sales growth due to supply chain disruptions, high inflation, and a strong dollar, as well as struggles in the consumer business due to lower home improvement, auto-care, and packaging demand, Q4 sales showed growth, and the company is optimistic about 2025.
The adjusted EBITDA margin contracted by 70 basis points to 24.5% in Q4, resulting in a noticeable decline in the bottom line to $1.68 on an adjusted basis. For 2025, 3M anticipates its full-year organic sales to grow up to 3%, with adjusted earnings per share ranging between $7.60 and $7.90. This outlook contrasts with the street estimate of a slight sales decline and an adjusted earnings estimate of $7.78 per share.
Following its positive earnings report and optimistic outlook, MMM stock surged by 4%. Over the past four years, MMM stock's growth has been inconsistent, with annual returns varying between 5% and 46%. In contrast, the Trefis High-Quality Portfolio, with a balanced mix of 30 stocks, has recorded less volatility and consistently outperformed the S&P 500 since inception.
Given the uncertain macroeconomic climate and potential policy changes, will 3M continue to outperform the S&P 500? While we will shortly update our model to reflect the latest earnings, at its current price of $147, MMM stock may be already overvalued, making entry at this point questionable.
Curious to see how 3M's peers perform on crucial metrics? Explore comprehensive comparisons at Peer Comparisons.
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3M's High-Quality Portfolio's outperformance can be linked to several factors, including its:
- Diversified holdings and target-date strategy, which spread risk and potentially boost long-term returns.
- Lower expense ratio compared to the category average, contributing to higher net returns.
- Glide path management, which adjusts allocation based on target date, leading to more stable and less volatile returns.
These factors contribute to a more consistent performance profile, although they might not guarantee higher returns in all market situations.
- Additionally, 3M's 3m revenue for Q4'24 saw a modest 2.2% year-over-year increase, reaching $5.8 billion, with the adjusted EBITDA margin contracting slightly.
- Interestingly, the positive earnings report and optimistic 2025 outlook led to a 4% surge in 3M stock, and over the past 3m, its stock has shown impressive growth, outperforming the S&P500.
