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Here's Why it is Time to Add 3M (MMM) to Your Portfolio Now
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3M Company (MMM - Free Report) is benefiting from strength in the electrical markets, automotive aftermarkets and abrasives within the Safety and Industrial business. Solid performance of the auto original equipment manufacturer business, penetration to new automotive platforms and growth in the advanced materials, commercial solutions and transportation safety business augur well for this Zacks Rank #2 (Buy) company.
With improving supply chains and a reduction in cost inflation due to deceleration in inflation, 3M anticipates improvements in organic growth, operating margins, earnings and cash flow this year. Pricing actions, restructuring savings and spending discipline are driving the company’s margin performance. Cost management actions benefited operating margins to the tune of 110 basis points in the fourth quarter of 2022.
Portfolio reshaping actions should help 3M focus on its core areas of growth and enhance shareholder value over time. In October 2022, the company completed the sale of its Neoplast and Neobun brands to Selic Corp. 3M also divested the manufacturing assets of its Ladlumkaew, Thailand, facility to Selic Corp. In September 2022, the company completed the divestiture of its food safety business to Neogen. In April 2022, 3M acquired technology assets of LeanTec. The acquisition has strengthened the company’s ability to deliver a more connected, digital body-shop solution via its RepairStack Performance Solutions.
3M is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. This February, the company hiked its dividend by 0.7% to $1.50 per share. In 2022, 3M rewarded its shareholders with dividend payments of $3.4 billion. The company bought back shares worth $1.4 billion in the same period. Strong free cash flow generation supports its shareholder-friendly measures. In 2022, the company generated an adjusted free cash flow of $4.7 billion with an adjusted free cash flow conversion of 82%. The company anticipates an adjusted operating cash flow of $5.8-$6.3 billion in 2023, reflecting a free cash flow conversion of 90-100%.
The positivity surrounding the stock is evident from the Zacks Consensus Estimate for 2023 earnings being revised upward by a penny in the past 60 days.
Other Key Picks
Some other top-ranked industrial stocks are as follows:
Deere & Company (DE - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 4.7%, on average.
Deere has an estimated earnings growth rate of 31% for the current fiscal year. The stock has gained 16.5% in the past six months.
Ingersoll Rand (IR - Free Report) presently flaunts a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 8.5%, on average.
Ingersoll Rand has an estimated earnings growth rate of 7% for the current year. The stock has rallied around 26% in the past six months.
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Here's Why it is Time to Add 3M (MMM) to Your Portfolio Now
3M Company (MMM - Free Report) is benefiting from strength in the electrical markets, automotive aftermarkets and abrasives within the Safety and Industrial business. Solid performance of the auto original equipment manufacturer business, penetration to new automotive platforms and growth in the advanced materials, commercial solutions and transportation safety business augur well for this Zacks Rank #2 (Buy) company.
With improving supply chains and a reduction in cost inflation due to deceleration in inflation, 3M anticipates improvements in organic growth, operating margins, earnings and cash flow this year. Pricing actions, restructuring savings and spending discipline are driving the company’s margin performance. Cost management actions benefited operating margins to the tune of 110 basis points in the fourth quarter of 2022.
Portfolio reshaping actions should help 3M focus on its core areas of growth and enhance shareholder value over time. In October 2022, the company completed the sale of its Neoplast and Neobun brands to Selic Corp. 3M also divested the manufacturing assets of its Ladlumkaew, Thailand, facility to Selic Corp. In September 2022, the company completed the divestiture of its food safety business to Neogen. In April 2022, 3M acquired technology assets of LeanTec. The acquisition has strengthened the company’s ability to deliver a more connected, digital body-shop solution via its RepairStack Performance Solutions.
3M Company Price and Consensus
3M Company price-consensus-chart | 3M Company Quote
3M is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. This February, the company hiked its dividend by 0.7% to $1.50 per share. In 2022, 3M rewarded its shareholders with dividend payments of $3.4 billion. The company bought back shares worth $1.4 billion in the same period. Strong free cash flow generation supports its shareholder-friendly measures. In 2022, the company generated an adjusted free cash flow of $4.7 billion with an adjusted free cash flow conversion of 82%. The company anticipates an adjusted operating cash flow of $5.8-$6.3 billion in 2023, reflecting a free cash flow conversion of 90-100%.
The positivity surrounding the stock is evident from the Zacks Consensus Estimate for 2023 earnings being revised upward by a penny in the past 60 days.
Other Key Picks
Some other top-ranked industrial stocks are as follows:
Deere & Company (DE - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 4.7%, on average.
You can see the complete list of today’s Zacks #1 Rank stocks.
Deere has an estimated earnings growth rate of 31% for the current fiscal year. The stock has gained 16.5% in the past six months.
Ingersoll Rand (IR - Free Report) presently flaunts a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 8.5%, on average.
Ingersoll Rand has an estimated earnings growth rate of 7% for the current year. The stock has rallied around 26% in the past six months.