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Here's Why You Should Give the 3M (MMM) Stock a Shot Now

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3M Company (MMM - Free Report) is riding on the back of strength across key end markets, easing supply chain issues and pricing actions.

Strength in electrical markets, automotive aftermarkets and abrasives within the Safety and Industrial business augurs well for this Zacks Rank #2 (Buy) company. Solid performance of the auto OEM (original equipment manufacturer) business, penetration to new automotive platforms and growth of advanced materials, commercial solutions and transportation safety business bode well for the Transportation and Electronics segment.

With improving supply chains and deceleration in cost inflation, 3M anticipates improvements in organic growth, operating margins, earnings and cash flow in due course of the year. Pricing actions, restructuring savings and spending discipline are supporting the company’s operating margins. In the fourth quarter of 2022, the operating margin improved 110 basis points year over year.

3M Company Price and Consensus

3M Company Price and Consensus

3M Company price-consensus-chart | 3M Company Quote

3M’s measures to reward shareholders handsomely through dividends and share buybacks are encouraging. 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%.

Other Key Picks

Here are some other top-ranked stocks for your consideration:

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 around 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 23% in the past six months.


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