3M (NYSE:MMM) will announce its fourth quarter earnings on Thursday, January 24. The diversified industrial company posted moderate growth in earnings in the first three quarters of 2012 on the recovering U.S. industrial sector partially offset by a decline in Europe. Earnings were $4.91 per diluted share in the nine months ended September 30, up from $4.61 per diluted share in the year-ago period. 
In the fourth quarter, these trends have persisted and so we anticipate the company to continue to post moderate growth in earnings. For full year 2012, 3M has forecast earnings in the range of $6.27-$6.35 per diluted share, up from $5.96 per diluted share in 2011.  
We currently have a stock price estimate of $93.36 for the company, approximately 5% below its current market price.
Mixed global economic environment
3M sells a variety of products that include tapes, post-it notes, industrial adhesives, medical supplies, electric cables and optical films. As such the company’s growth is correlated to the performance of several sectors across geographies. In the fourth quarter, strong growth in Latin America, the recovering industrial sector in the U.S. and the growing healthcare sector in Asia-Pacific will contribute to 3M’s growth. On the flip side, the weakness in Europe will impact the company negatively.
In the nine months ended September 30, sales from Europe, Middle-East and Africa (EMEA) declined 6% on a year-over-year basis. The region constitutes 22% of 3M’s global sales. 
Recovering industrial sector in the U.S.
On the bright side, the ongoing industrial sector recovery in the U.S. will contribute towards earnings growth. 3M serves the industrial sector with coated and non-woven abrasives, adhesives, specialty materials, filtration products, energy control products, acoustic systems, and components used in automotive, marine, aircraft and specialty vehicles.
In the first three quarters of 2012, 3M’s sales in the U.S. improved by 4% y-o-y, and the country constitutes just over a third of the company’s global sales. 
Rising healthcare spending in emerging economies of Asia-Pacific
The growing healthcare sectors in emerging economies of Asia-Pacific will also contribute towards earnings growth in Q4. Public spending on healthcare in these countries is rising due to rising prosperity from improving middle-class incomes. 3M serves this sector with medical and surgical supplies, skin infection prevention products, dental products and health information systems. The region contributed 30% of 3M’s sales in the first nine months of the year.
In the nine months ended September 30, sales in 3M’s healthcare division also grew 10% y-o-y in Asia-Pacific. In comparison, growth in the U.S. and EMEA was 3% and 1%, respectively, on a y-o-y basis. 
Fast growth in Latin America
Strong growth in most sectors in Latin America will also add to 3M’s Q4 earnings growth. The region constitutes just 12% of the company’s global sales, but sales from the region grew 12% y-o-y in local currency terms. Notes: