3M Company (MMM Quick QuoteMMM - Free Report) is scheduled to release fourth-quarter 2024 results on Jan. 21, before market open. The Zacks Consensus Estimate for earnings is currently pegged at $1.66 per share on revenues of $5.79 billion.

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Fourth-quarter earnings estimates have been revised upward by a penny over the past seven days. However, the bottom-line projection indicates a decrease of 31.4% from the year-ago number. The Zacks Consensus Estimate for quarterly revenues indicates a year-over-year decline of 27.7%.

For the current year, the Zacks Consensus Estimate for 3M’s revenues is pegged at $23.6 billion, implying a decline of 27.8% year over year. Also, the consensus mark for current-year earnings per share is pegged at $7.28, implying a decrease of 21.2% on a year-over-year basis.

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It is worth noting that in April 2024, 3M completed the spin-off of its Health Care business into a separate public company. Notably, the spin-off is likely to have weighed on MMM’s year-over-year top-line comparison in the quarter.

Earnings Surprise History

3M has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 9.6%. In the last reported quarter, it delivered an earnings surprise of 2.6%.

Earnings Whispers for MMM

Our proven model does not conclusively predict an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat, but that’s not the case here.

MMM has an Earnings ESP of +0.72% and a Zacks Rank #4 (Sell).

You can uncover the best stocks before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

What’s Likely to Shape 3M’s Q4 Results?

Weakness in the consumer retail end markets, owing to lower consumer retail discretionary spending on hardline goods, is expected to have hurt the Consumer segment’s performance in the fourth quarter. There has been particular weakness in the packaging & expression, home & auto care and consumer safety and well-being businesses. The Zacks Consensus Estimate for the fourth-quarter revenues from the Consumer segment is pegged at $1.2 billion, indicating a decline of 4.8% sequentially.

The Safety and Industrial segment is expected to have put up a weak show in the upcoming earnings due to softness across the industrial specialties, abrasives and automotive aftermarket businesses. However, strength in roofing granules and electrical markets is likely to have augmented its sales. The consensus estimate for the segment’s revenues is pegged at $2.7 billion, indicating a 3.4% decrease from the previous quarter’s number.

High debt level and interest expenses remain another concern for the company. Exiting the third quarter of 2024, 3M’s long-term debt was high at $11.3 billion. Also, interest expenses in the first nine months of 2024 increased 64.5% year over year to $939 million. Exiting the third quarter, its short-term borrowings and current portion of long-term debt totaled $1.9 billion. Higher interest expenses are likely to have proven detrimental to its profitability in the to-be-reported quarter.

3M’s international presence keeps it exposed to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar requires the company to either raise prices or contract profit margins in locations outside the United States. For instance, adverse foreign currency translation lowered the company’s sales by 0.3% year over year in the third quarter of 2024.

Nevertheless, strength in the commercial branding and transportation end markets is expected to have driven the Transportation and Electronics segment’s performance. Solid electronics demand, backed by an increase in production volume, by electronics original equipment manufacturer customers bodes well. The consensus estimate for the Transportation and Electronics segment’s revenues is pegged at $1.8 billion.

Price Performance & Valuation

MMM shares have gained 3% in the past three months against the Zacks Diversified Operations industry’s 11% decline. The conglomerate giant’s shares have also outperformed the S&P 500’s growth of 2.5%. The company’s peers Honeywell International Inc. (HON Quick QuoteHON - Free Report) , Federal Signal Corporation (FSS Quick QuoteFSS - Free Report) and Griffon Corporation (GFF Quick QuoteGFF - Free Report) have gained 0.3%, 10.3% and 12%, respectively, in the same period.

MMM’s Three-Month Price Performance

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In terms of valuation, MMM’s forward 12-month price-to-earnings (P/E) is 17.70X, a premium to its five-year median of 15.05X and industry average of 15.16X. This indicates that investors will be paying a higher price than the company's expected earnings growth compared with its peers.

Price-to-Earnings (Forward 12 Months)

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How Should You Play 3M Pre-Q4 Earnings?

3M's robust and diversified portfolio, encompassing industrial abrasives, automotive components, electrical products and packaging materials, along with strength in the Transportation and Electronics segment, seems promising for its long-term growth.

However, weakness in the Safety and Industrial segment, along with tepid demand in the consumer retail end markets, has been concerning for its near-term performance. Also, a high debt level and expensive valuation warrant a cautious approach for existing investors. Potential investors should consider waiting for MMM’s earnings report and clearer signs of recovery before investing in the stock.