What’s Next For 3M Stock After A 12% Rise In A Month?

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Upside
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Market
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Trefis
MMM: 3M Company logo
MMM
3M Company

3M stock (NYSE: MMM) is up 12% in a month, significantly outperforming the broader S&P500 index, up just 1%. The rise in MMM stock can be attributed to the upbeat Q3 earnings it reported in late October. Its top line was below, but earnings were slightly above our estimates, driven by better price realization.

3M’s revenue of $8.6 billion reflected a 4% y-o-y decline. Sales were down 4% each for Health Care, Safety & Industrial, and Transportation & Electronics segments, primarily due to forex headwinds. However, its earnings of $2.69 on a per share and adjusted basis was up 4% y-o-y, partly due to a 40 bps rise in operating margin.

Given the forex headwinds, the company lowered its full-year sales forecast to be down 3.5% to 3.0% vs. down 2.5% to 0.5% earlier, and their earnings outlook to be in the range of $10.10 to $10.35 vs. its prior guidance of $10.30 to $10.80 on a per share and adjusted basis.

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3M stock has been weighed down this year due to its exposure to earplugs lawsuits and concerns over slowing economic growth and its impact on 3M’s businesses. We estimate 3M’s Valuation to be around $142 per share, which is about 14% above the current market price of $125. This represents a 14x P/E multiple based on its expected EPS of $10.22 in 2022, compared to the last three-year average of 18x. We have assigned a slightly lower multiple for 3M than its historical average for the above reasons that led to the stock decline.

But What About The Near Term?

Now that MMM stock has seen a 12% rise in a month, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a slightly higher chance of an increase in MMM stock over the next month. MMM stock has seen a move of 12% or more 49 times in the last ten years. 26 of those resulted in MMM stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 26 out of 49, or a 53% chance of a rise in MMM stock over the coming month. See our analysis on 3M Stock Chance of Rise for more details.

Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using the last ten years’ data

  • After moving -1.4% or more over five days, the stock rose on 55% of the occasions in the next five days.
  • After moving 6.9% or more over ten days, the stock rose in the next ten days on 47% of the occasions
  • After moving 12.0% or more over a twenty-one-day period, the stock rose on 53% of the occasions in the next twenty-one days.

This pattern suggests a higher chance of a rise in MMM stock over the next five and twenty-one days.

3M (MMM) Stock Return (Recent) Comparison With Peers And S&P500

  • Five-Day Return: DD highest at 7.6%; MMM lowest at -1.4%
  • Ten-Day Return: HON highest at 13.7%; GLW lowest at 2.2%
  • Twenty-One Days Return: GE highest at 22.4%; GLW lowest at 4.4%

While MMM stock looks like it can see higher levels, it is helpful to see how 3M’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Acuity Brands vs. Footlocker.

With inflation rising and the Fed raising interest rates, among other factors, MMM stock has seen a 30% fall this year. Can it drop more? See how low 3M stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Nov 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 MMM Return -1% -30% -30%
 S&P 500 Return -3% -21% 68%
 Trefis Multi-Strategy Portfolio -4% -25% 195%

[1] Month-to-date and year-to-date as of 11/7/2022
[2] Cumulative total returns since the end of 2016

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