Is there an advantage for 3M stocks?

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3M Stock (NYSE: MMM), which currently trades at $146 per share, appears to have little room for growth. The stock is down 17% year-to-date, behaving in line with the broader S&P 500, which remains down around 15% over the same period.

There are a few trends that have been dragging the stock down lately. The current high inflationary environment, rising interest rates and fears of recession weighed on industrial stocks, including 3M. In addition, concerns about potential litigation costs of $33 billion for the company do not bode well for its shares. [1]

The company reported positive first quarter results last month. However, looking at some of the individual segments, lower demand for face masks weighed on safety and industrial sales growth, while ongoing manufacturing challenges for the automotive industry are impacting the transportation and dive business. electronics from 3M. Lately, a pick-up in demand has contributed to revenue growth in its healthcare and consumer businesses.

The company’s operating margin fell 390 basis points to 18.6% in the first quarter of 2022, from 22.5% in the prior year quarter and 20.8% for the full year 2021. Given the current environment of higher inflation, the company may struggle to expand its operating margin in the near term.

Today, concerns about economic growth, rising commodity prices and supply chain disruptions are real, and industrial companies could likely experience short-term difficulties. As for MMM shares, at current levels of around $146 per share, they are trading at less than 13 times projected earnings of $10.85 per share for 2022, compared to an average of more than 16 times during of the past three years. We value MMM stock at around $159 per share, which is only 9% above the current market price, implying limited upside. See our analysis on 3M Assessment: Expensive or cheap for more details on what drives our rating for the company. Also find our analysis on 3M turnover: How does 3M make money for more details on the company’s main sources of revenue and their evolution.

Although MMM stock appears to have limited upside, it is worth seeing how 3M peers price on the measures that matter. You will find other useful comparisons for companies in all sectors on Peer comparisons.

In addition, the Covid-19 crisis has created many price discontinuities which can provide interesting trading opportunities. For example, you’ll be surprised how counter-intuitive stock valuation is to CSX vs. Simpson Manufacturing.

With stock prices falling precipitously across all sectors, we may be heading into a bear market for the first time since March 2020, when the Covid-19 outbreak triggered a stock market crash. We capture key Dow Jones trends during and after major stock market crashes in our interactive dashboard analysis,’Comparison of stock market crashes.’

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