3M (MMM): Assessing Valuation After a Strong Year-to-Date Rally and Recent Pullback
3M (MMM) has quietly outperformed the broader market this year, and that kind of comeback always makes investors wonder whether the move still has room to run or is already pricing in the good news.
See our latest analysis for 3M.
The recent pullback, including a 7 day share price return of minus 4.23 percent after a strong year to date share price return of 24.72 percent, looks more like a breather than a trend reversal. This is especially notable given the 1 year total shareholder return of 27.49 percent.
If 3M’s rebound has you thinking about where capital goods strength might show up next, this is a good moment to explore fast growing stocks with high insider ownership.
With earnings back in growth mode, a solid intrinsic discount, and the stock still trading below analyst targets, is 3M quietly offering value, or is the market already banking on years of future recovery and growth?
Most Popular Narrative Narrative: 7.2% Undervalued
With 3M closing at $161.76 against a most popular narrative fair value of $174.25, the story being told is that the turnaround still is not fully priced in.
Significant operational efficiency gains, such as improved on time delivery, increased equipment effectiveness, quality cost reductions, and supply chain or process consolidation, are driving structurally higher operating margins and earnings benefits expected to compound as further optimization and automation are rolled out company wide.
Want to see what kind of steady growth path and richer margins this implies for 3M, and which future earnings multiple that playbook is aiming for?
Result: Fair Value of $174.25 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, unresolved PFAS litigation and any renewed slowdown in key industrial or electronics end markets could quickly challenge the optimism behind this turnaround narrative.
Find out about the key risks to this 3M narrative.
Build Your Own 3M Narrative
If this narrative does not fully reflect your view, or you would rather dive into the numbers yourself, you can build a custom version in just a few minutes, Do it your way.
A great starting point for your 3M research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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