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3M Co Valuation – April 2019 #MMM

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Company Profile (excerpt from Reuters): 3M Company (3M), incorporated on June 25, 1929, is a technology company. The Company is a manufacturer and marketer of a range of products and services. The Company operates through five segments: Industrial; Safety and Graphics; Health Care, and Consumer. 3M products are sold through various distribution channels, including directly to users and through a range of wholesalers, retailers, jobbers, distributors and dealers in a range of trades in various countries around the world. As of December 31, 2016, the Company had operated 81 manufacturing facilities in 29 states. As of December 31, 2016, the Company had operated 122 manufacturing and converting facilities in 36 countries outside the United States.

Downloadable PDF version of this valuation:

ModernGraham Valuation of MMM – April 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $124,053,974,878 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.89 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 51.31% Pass
6. Moderate PEmg Ratio PEmg < 20 24.00 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 12.96 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.89 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.07 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $8.98
MG Growth Estimate 3.94%
MG Value $147.10
Opinion Overvalued
MG Grade B
MG Value based on 3% Growth $130.16
MG Value based on 0% Growth $76.30
Market Implied Growth Rate 7.75%
Current Price $215.41
% of Intrinsic Value 146.44%

3M Co is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $7.11 in 2015 to an estimated $8.98 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.75% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into 3M Co revealed the company was trading above its Graham Number of $62.69. The company pays a dividend of $5.44 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 24, which was below the industry average of 24.48, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-21.84.

3M Co performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$21.84
Graham Number $62.69
PEmg 24.00
Current Ratio 1.89
PB Ratio 12.96
Current Dividend $5.44
Dividend Yield 2.53%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $13,709,000,000
Total Current Liabilities $7,244,000,000
Long-Term Debt $13,411,000,000
Total Assets $36,500,000,000
Intangible Assets $12,708,000,000
Total Liabilities $26,652,000,000
Shares Outstanding (Diluted Average) 592,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.28
Dec2018 $8.89
Dec2017 $7.93
Dec2016 $8.16
Dec2015 $7.58
Dec2014 $7.49
Dec2013 $6.72
Dec2012 $6.32
Dec2011 $5.96
Dec2010 $5.63
Dec2009 $4.52
Dec2008 $4.89
Dec2007 $5.60
Dec2006 $5.06
Dec2005 $3.98
Dec2004 $3.56
Dec2003 $3.02
Dec2002 $2.50
Dec2001 $1.79
Dec2000 $2.23
Dec1999 $2.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.98
Dec2018 $8.22
Dec2017 $7.78
Dec2016 $7.56
Dec2015 $7.11
Dec2014 $6.72
Dec2013 $6.17
Dec2012 $5.75
Dec2011 $5.42
Dec2010 $5.14
Dec2009 $4.87
Dec2008 $4.90
Dec2007 $4.69
Dec2006 $4.03
Dec2005 $3.33
Dec2004 $2.88
Dec2003 $2.47

Recommended Reading:

Other ModernGraham posts about the company

3M Co Valuation – November 2018 $MMM
3M Company Valuation – February 2018 $MMM
3M Co. Valuation – December 2016 $MMM
3M Company Valuation – August 2016 $MMM
3M Company Valuation – February 2016 Update $MMM

Other ModernGraham posts about related companies

Illinois Tool Works Inc Valuation – April 2019 #ITW
Honeywell International Inc Valuation – March 2019 #HON
Ingersoll-Rand PLC Valuation – January 2019 $IR
General Electric Co Valuation – November 2018 $GE
3M Co Valuation – November 2018 $MMM
ITT Inc Valuation – July 2018 $ITT
Illinois Tool Works Inc Valuation – June 2018 $ITW
Honeywell International Inc Valuation – June 2018 $HON
General Electric Co Valuation – February 2018 $GE
3M Company Valuation – February 2018 $MMM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

3M Co Valuation – November 2018 $MMM

Conglomerates Stocks Leave a Comment on 3M Co Valuation – November 2018 $MMM

Company Profile (excerpt from Reuters): 3M Company (3M), incorporated on June 25, 1929, is a technology company. The Company is a manufacturer and marketer of a range of products and services. The Company operates through five segments: Industrial; Safety and Graphics; Health Care, and Consumer. 3M products are sold through various distribution channels, including directly to users and through a range of wholesalers, retailers, jobbers, distributors and dealers in a range of trades in various countries around the world. As of December 31, 2016, the Company had operated 81 manufacturing facilities in 29 states. As of December 31, 2016, the Company had operated 122 manufacturing and converting facilities in 36 countries outside the United States.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MMM – November 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $117,097,911,210 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.97 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 58.35% Pass
6. Moderate PEmg Ratio PEmg < 20 23.95 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 11.67 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.97 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.91 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $8.40
MG Growth Estimate 3.74%
MG Value $134.10
Opinion Overvalued
MG Grade B
MG Value based on 3% Growth $121.75
MG Value based on 0% Growth $71.37
Market Implied Growth Rate 7.72%
Current Price $201.10
% of Intrinsic Value 149.97%

3M Co is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $6.72 in 2014 to an estimated $8.4 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.72% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into 3M Co revealed the company was trading above its Graham Number of $64.19. The company pays a dividend of $4.7 per share, for a yield of 2.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23.95, which was below the industry average of 34.87, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.96.

3M Co performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$20.96
Graham Number $64.19
PEmg 23.95
Current Ratio 1.97
PB Ratio 11.67
Current Dividend $4.70
Dividend Yield 2.34%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $14,419,000,000
Total Current Liabilities $7,336,000,000
Long-Term Debt $13,539,000,000
Total Assets $37,275,000,000
Intangible Assets $12,849,000,000
Total Liabilities $26,964,000,000
Shares Outstanding (Diluted Average) 598,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.42
Dec2017 $7.93
Dec2016 $8.16
Dec2015 $7.58
Dec2014 $7.49
Dec2013 $6.72
Dec2012 $6.32
Dec2011 $5.96
Dec2010 $5.63
Dec2009 $4.52
Dec2008 $4.89
Dec2007 $5.60
Dec2006 $5.06
Dec2005 $3.98
Dec2004 $3.56
Dec2003 $3.02
Dec2002 $2.50
Dec2001 $1.79
Dec2000 $2.23
Dec1999 $2.19
Dec1998 $1.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.40
Dec2017 $7.78
Dec2016 $7.56
Dec2015 $7.11
Dec2014 $6.72
Dec2013 $6.17
Dec2012 $5.75
Dec2011 $5.42
Dec2010 $5.14
Dec2009 $4.87
Dec2008 $4.90
Dec2007 $4.69
Dec2006 $4.03
Dec2005 $3.33
Dec2004 $2.88
Dec2003 $2.47
Dec2002 $2.15

Recommended Reading:

Other ModernGraham posts about the company

3M Company Valuation – February 2018 $MMM
3M Co. Valuation – December 2016 $MMM
3M Company Valuation – August 2016 $MMM
3M Company Valuation – February 2016 Update $MMM
15 Best Stocks For Value Investors This Week – 9/12/15

Other ModernGraham posts about related companies

ITT Inc Valuation – July 2018 $ITT
Illinois Tool Works Inc Valuation – June 2018 $ITW
Honeywell International Inc Valuation – June 2018 $HON
General Electric Co Valuation – February 2018 $GE
3M Company Valuation – February 2018 $MMM
Raven Industries Inc Valuation – September 2017 $RAVN
Illinois Tool Works Inc Valuation – August 2017 $ITW
Honeywell International Inc Valuation – July 2017 $HON
Carlisle Companies Inc Valuation – Initial Coverage $CSL
ITT Inc Valuation – Initial Coverage $ITT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

3M Company Valuation – February 2018 $MMM

Conglomerates Stocks Leave a Comment on 3M Company Valuation – February 2018 $MMM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Undervalued Stocks for the Enterprising Investor – August 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how 3M Company (MMM) fares in the ModernGraham valuation model.

Company Profile (obtained from Marketwatch): 3M Co. is a diversified technology company, which manufactures industrial, safety and consumer products. The company operates its business through the following segments: Industrial, Safety & Graphics, Health Care, Electronics & Energy, and Consumer. The Industrial segment provides products, including tapes, abrasives, adhesives, specialty materials and filtration systems to diverse markets from purification to aerospace. The Safety & Graphics segment offers personal protective equipment, traffic safety & security products, commercial graphics systems, commercial cleaning & protection products, floor matting, roofing granules for asphalt shingles, and fall protection products. The Health Care segment supplies medical and surgical equipment, skin health & infection prevention products, drug delivery systems, dental & orthodontic products, health information systems and food safety products. The Electronics & Energy segment offers optical films solutions for electronic displays, packaging and interconnection devices; insulating and splicing solutions; touch screens and touch monitors; renewable energy component solutions; and infrastructure protection products. The Consumer segment provides sponges, scouring pads, high-performance cloths, consumer and office tapes, repositionable notes, indexing systems, home improvement products, home care products, protective material products, and consumer & office tapes, as well as adhesives. The company was founded by Henry S. Bryan, Hermon W. Cable, John Dwan, William A. McGonagle and J. Danley Budd in 1902 and is headquartered in St. Paul, MN.

MMM Chart

MMM data by YCharts

Downloadable PDF version of this valuation:

ModernGraham Valuation of MMM – February 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $140,287,901,220 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.86 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 63.50% Pass
6. Moderate PEmg Ratio PEmg < 20 27.16 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 12.50 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.86 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.84 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $8.67
MG Growth Estimate 4.35%
MG Value $149.22
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $125.76
MG Value based on 0% Growth $73.72
Market Implied Growth Rate 9.33%
Current Price $235.58
% of Intrinsic Value 157.87%

3M Co is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $6.72 in 2014 to an estimated $8.67 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.33% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into 3M Co revealed the company was trading above its Graham Number of $66.95. The company pays a dividend of $4.7 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 27.16, which was above the industry average of 26.48. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-19.81.

3M Co receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$19.81
Graham Number $66.95
PEmg 27.16
Current Ratio 1.86
PB Ratio 12.50
Current Dividend $4.70
Dividend Yield 2.00%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $14,277,000,000
Total Current Liabilities $7,687,000,000
Long-Term Debt $12,096,000,000
Total Assets $37,987,000,000
Intangible Assets $13,449,000,000
Total Liabilities $26,424,000,000
Shares Outstanding (Diluted Average) 613,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.25
Dec2017 $7.93
Dec2016 $8.16
Dec2015 $7.58
Dec2014 $7.49
Dec2013 $6.72
Dec2012 $6.32
Dec2011 $5.96
Dec2010 $5.63
Dec2009 $4.52
Dec2008 $4.89
Dec2007 $5.60
Dec2006 $5.06
Dec2005 $3.98
Dec2004 $3.56
Dec2003 $3.02
Dec2002 $2.50
Dec2001 $1.79
Dec2000 $2.23
Dec1999 $2.19
Dec1998 $1.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.67
Dec2017 $7.78
Dec2016 $7.56
Dec2015 $7.11
Dec2014 $6.72
Dec2013 $6.17
Dec2012 $5.75
Dec2011 $5.42
Dec2010 $5.14
Dec2009 $4.87
Dec2008 $4.90
Dec2007 $4.69
Dec2006 $4.03
Dec2005 $3.33
Dec2004 $2.88
Dec2003 $2.47
Dec2002 $2.15

Recommended Reading:

Other ModernGraham posts about the company

3M Company Valuation – August 2016 $MMM
3M Company Valuation – February 2016 Update $MMM
15 Best Stocks For Value Investors This Week – 9/12/15
3M Company Analysis – September 2015 Update $MMM
21 Companies in the Spotlight This Week – 5/9/15

Other ModernGraham posts about related companies

E I du Pont de Nemours & Co Valuation – August 2016 $DD
3M Company Valuation – August 2016 $MMM
General Electric Co Valuation – July 2016 $GE
Illinois Tool Works Inc Valuation – July 2016 $ITW
Raven Industries Inc Valuation – July 2016 $RAVN
E.I. du Pont de Nemours Valuation – February 2016 $DD
Honeywell International Inc Valuation – February 2016 $HON
3M Company Valuation – February 2016 Update $MMM
Raven Industries Inc Valuation – January 2016 Update $RAVN
Illinois Tool Works Inc Valuation – January 2016 Update $ITW

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

3M Co. Valuation – December 2016 $MMM

Conglomerates Stocks Leave a Comment on 3M Co. Valuation – December 2016 $MMM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how 3M Co (MMM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): 3M Company is a technology company. The Company operates through five segments. Its Industrial segment serves markets, such as automotive original equipment manufacturer and automotive aftermarket, electronics, appliance, paper and printing, packaging, food and beverage, and construction. Its Safety and Graphics segment serves markets for the safety, security and productivity of people, facilities and systems. Its Health Care segment serves markets that include medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, health information systems, and food manufacturing and testing. Its Electronics and Energy segment serves customers in electronics and energy markets, including solutions for electronic devices; electrical products; telecommunications networks, and power generation and distribution. Its Consumer segment serves markets that include consumer retail, office business to business, home improvement, drug and pharmacy retail, and other markets.

MMM Chart

MMM data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MMM – December 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $108,253,217,261 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.90 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 54.70% Pass
6. Moderate PEmg Ratio PEmg < 20 23.68 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.22 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.92 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $7.55
MG Growth Estimate 4.70%
MG Value $135.24
Opinion Overvalued
MG Grade B
MG Value based on 3% Growth $109.52
MG Value based on 0% Growth $64.20
Market Implied Growth Rate 7.59%
Current Price $178.83
% of Intrinsic Value 132.24%

3M Co is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $5.75 in 2012 to an estimated $7.55 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.59% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into 3M Co revealed the company was trading above its Graham Number of $60.49. The company pays a dividend of $4.36 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23.68, which was below the industry average of 25.72, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-15.95.

3M Co performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$15.95
Graham Number $60.49
PEmg 23.68
Current Ratio 1.90
PB Ratio 9.22
Current Dividend $4.36
Dividend Yield 2.44%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

 

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $12,179,000,000
Total Current Liabilities $6,400,000,000
Long-Term Debt $11,079,000,000
Total Assets $34,051,000,000
Intangible Assets $11,852,000,000
Total Liabilities $22,049,000,000
Shares Outstanding (Diluted Average) 618,800,000

Earnings Per Share History

Next Fiscal Year Estimate $8.15
Dec2015 $7.58
Dec2014 $7.49
Dec2013 $6.72
Dec2012 $6.32
Dec2011 $5.96
Dec2010 $5.63
Dec2009 $4.52
Dec2008 $4.89
Dec2007 $5.60
Dec2006 $5.06
Dec2005 $3.98
Dec2004 $3.56
Dec2003 $3.02
Dec2002 $2.50
Dec2001 $1.79
Dec2000 $2.23
Dec1999 $2.19
Dec1998 $1.49
Dec1997 $2.53
Dec1996 $1.82

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $7.55
Dec2015 $7.11
Dec2014 $6.72
Dec2013 $6.17
Dec2012 $5.75
Dec2011 $5.42
Dec2010 $5.14
Dec2009 $4.87
Dec2008 $4.90
Dec2007 $4.69
Dec2006 $4.03
Dec2005 $3.33
Dec2004 $2.88
Dec2003 $2.47
Dec2002 $2.15
Dec2001 $1.99
Dec2000 $2.08

Recommended Reading:

Other ModernGraham posts about the company

3M Company Valuation – February 2016 Update $MMM
15 Best Stocks For Value Investors This Week – 9/12/15
3M Company Analysis – September 2015 Update $MMM
21 Companies in the Spotlight This Week – 5/9/15
3M Company Quarterly Valuation – May 2015 $MMM

Other ModernGraham posts about related companies

E I du Pont de Nemours & Co Valuation – August 2016 $DD
3M Company Valuation – August 2016 $MMM
General Electric Co Valuation – July 2016 $GE
Illinois Tool Works Inc Valuation – July 2016 $ITW
Raven Industries Inc Valuation – July 2016 $RAVN
E.I. du Pont de Nemours Valuation – February 2016 $DD
Honeywell International Inc Valuation – February 2016 $HON
3M Company Valuation – February 2016 Update $MMM
Raven Industries Inc Valuation – January 2016 Update $RAVN
Illinois Tool Works Inc Valuation – January 2016 Update $ITW

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

3M Company Valuation – August 2016 $MMM

Conglomerates Stocks Leave a Comment on 3M Company Valuation – August 2016 $MMM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today - July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how 3M Company (MMM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): 3M Company is a technology company. The Company operates through five segments. Its Industrial segment serves markets, such as automotive original equipment manufacturer and automotive aftermarket, electronics, appliance, paper and printing, packaging, food and beverage, and construction. Its Safety and Graphics segment serves markets for the safety, security and productivity of people, facilities and systems. Its Health Care segment serves markets that include medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, health information systems, and food manufacturing and testing. Its Electronics and Energy segment serves customers in electronics and energy markets, including solutions for electronic devices; electrical products; telecommunications networks, and power generation and distribution. Its Consumer segment serves markets that include consumer retail, office business to business, home improvement, drug and pharmacy retail, and other markets.

chart (14)

Downloadable PDF version of this valuation:

ModernGraham Valuation of MMM – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $107,582,873,564 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.58 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 54.30% Pass
6. Moderate PEmg Ratio PEmg < 20 23.70 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.32 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.58 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.22 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

MMM value chart August 2016

EPSmg $7.53
MG Growth Estimate 4.65%
MG Value $134.09
Opinion Overvalued
MG Grade B
MG Value based on 3% Growth $109.23
MG Value based on 0% Growth $64.03
Market Implied Growth Rate 7.60%
Current Price $178.57
% of Intrinsic Value 133.17%

3M Co is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $5.75 in 2012 to an estimated $7.53 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.6% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into 3M Co revealed the company was trading above its Graham Number of $59.75. The company pays a dividend of $4.27 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23.7, which was below the industry average of 25.72, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-15.95.

3M Co performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

MMM charts August 2016

Net Current Asset Value (NCAV) -$15.95
Graham Number $59.75
PEmg 23.70
Current Ratio 1.58
PB Ratio 9.32
Current Dividend $4.27
Dividend Yield 2.39%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $11,436,000,000
Total Current Liabilities $7,254,000,000
Long-Term Debt $9,299,000,000
Total Assets $33,235,000,000
Intangible Assets $11,833,000,000
Total Liabilities $21,341,000,000
Shares Outstanding (Diluted Average) 620,900,000

Earnings Per Share History

Next Fiscal Year Estimate $8.09
Dec2015 $7.58
Dec2014 $7.49
Dec2013 $6.72
Dec2012 $6.32
Dec2011 $5.96
Dec2010 $5.63
Dec2009 $4.52
Dec2008 $4.89
Dec2007 $5.60
Dec2006 $5.06
Dec2005 $4.12
Dec2004 $3.75
Dec2003 $3.02
Dec2002 $2.50
Dec2001 $1.79
Dec2000 $2.23
Dec1999 $2.17
Dec1998 $1.44
Dec1997 $2.53
Dec1996 $1.82

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $7.53
Dec2015 $7.11
Dec2014 $6.72
Dec2013 $6.17
Dec2012 $5.75
Dec2011 $5.42
Dec2010 $5.14
Dec2009 $4.88
Dec2008 $4.93
Dec2007 $4.74
Dec2006 $4.10
Dec2005 $3.43
Dec2004 $2.94
Dec2003 $2.47
Dec2002 $2.14
Dec2001 $1.98
Dec2000 $2.07

Recommended Reading:

Other ModernGraham posts about the company

3M Company Valuation – February 2016 Update $MMM
15 Best Stocks For Value Investors This Week – 9/12/15
3M Company Analysis – September 2015 Update $MMM
15 Best Stocks For Value Investors This Week – 9/12/15
21 Companies in the Spotlight This Week – 5/9/15

Other ModernGraham posts about related companies

General Electric Co Valuation – July 2016 $GE
Illinois Tool Works Inc Valuation – July 2016 $ITW
Raven Industries Inc Valuation – July 2016 $RAVN
E.I. du Pont de Nemours Valuation – February 2016 $DD
Honeywell International Inc Valuation – February 2016 $HON
3M Company Valuation – February 2016 Update $MMM
Raven Industries Inc Valuation – January 2016 Update $RAVN
Illinois Tool Works Inc Valuation – January 2016 Update $ITW
E.I. du Pont de Nemours Valuation – February 2016 $DD
Honeywell International Inc Valuation – February 2016 $HON

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

3M Company Valuation – February 2016 Update $MMM

Conglomerates Stocks Leave a Comment on 3M Company Valuation – February 2016 Update $MMM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how 3M Company (MMM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): 3M Company is a diversified technology company. The Company operates in five business segments: Industrial, which serves a range of markets, such as automotive original equipment manufacturer (OEM) and automotive aftermarket, electronics, appliance, paper and printing, packaging, food and beverage, and construction; Safety and Graphics, which serves a range of markets for the safety, security and productivity of people, facilities and systems; Electronics and Energy, which serves customers in electronics and energy markets, including solutions for electronic devices, telecommunications networks, electrical products, power generation and distribution, and infrastructure protection; Health Care, which serves markets that include medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, and health information systems, and Consumer, which serves markets that include consumer retail, office retail, home improvement, building maintenance and other markets.

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of MMM – February 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $91,496,121,934 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.54 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 54.10% Pass
6. Moderate PEmg Ratio PEmg < 20 20.08 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.91 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.54 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.26 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

MMM value Chart February 2016

EPSmg $7.51
MG Growth Estimate 4.60%
MG Value $132.97
Opinion Overvalued
MG Value based on 3% Growth $108.95
MG Value based on 0% Growth $63.87
Market Implied Growth Rate 5.79%
Current Price $150.84
% of Intrinsic Value 113.44%

3M Company qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio, and the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $5.75 in 2012 to an estimated $7.51 for 2016.  This level of demonstrated earnings growth does not support the market’s implied estimate of 5.79% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Stage 3: Information for Further Research

MMM Charts February 2016

Net Current Asset Value (NCAV) -$16.22
Graham Number $58.27
PEmg 20.08
Current Ratio 1.54
PB Ratio 7.91
Dividend Yield 2.61%
Number of Consecutive Years of Dividend Growth 20

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Dec2015
Total Current Assets $10,986,000,000
Total Current Liabilities $7,118,000,000
Long-Term Debt $8,753,000,000
Total Assets $32,718,000,000
Intangible Assets $11,850,000,000
Total Liabilities $20,971,000,000
Shares Outstanding (Diluted Average) 615,710,000

Earnings Per Share History

Next Fiscal Year Estimate $7.91
Dec2015 $7.73
Dec2014 $7.49
Dec2013 $6.72
Dec2012 $6.32
Dec2011 $5.96
Dec2010 $5.63
Dec2009 $4.52
Dec2008 $4.89
Dec2007 $5.60
Dec2006 $5.06
Dec2005 $3.98
Dec2004 $3.75
Dec2003 $3.02
Dec2002 $2.50
Dec2001 $1.79
Dec2000 $2.23
Dec1999 $2.19
Dec1998 $1.51
Dec1997 $2.53
Dec1996 $1.83

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $7.51
Dec2015 $7.16
Dec2014 $6.72
Dec2013 $6.17
Dec2012 $5.75
Dec2011 $5.42
Dec2010 $5.14
Dec2009 $4.87
Dec2008 $4.92
Dec2007 $4.71
Dec2006 $4.07
Dec2005 $3.38
Dec2004 $2.94
Dec2003 $2.47
Dec2002 $2.15
Dec2001 $2.00
Dec2000 $2.09

Recommended Reading:

Other ModernGraham posts about the company

15 Best Stocks For Value Investors This Week – 9/12/15
21 Companies in the Spotlight This Week – 5/9/15
3M Company Quarterly Valuation – May 2015 $MMM
34 Companies in the Spotlight This Week – 2/7/15
3M Company Quarterly Valuation – February 2015 $MMM

Other ModernGraham posts about related companies

Raven Industries Inc Valuation – January 2016 Update $RAVN
Illinois Tool Works Inc Valuation – January 2016 Update $ITW
E I du Pont de Nemours & Co Valuation – November 2015 Update $DD
E I Du Pont de Nemours & Company Analysis – August 2015 Update $DD
E. I. Du Pont De Nemours and Company Quarterly Valuation – May 2015 $DD
Honeywell International Inc. Valuation – October 2015 Update $HON
Raven Industries Inc. Analysis – October 2015 Update $RAVN
Illinois Tool Works Inc. Analysis – October 2015 Update $ITW
3M Company Analysis – September 2015 Update $MMM
Honeywell International Inc. Analysis – July 2015 Update $HON

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

3M Company Analysis – September 2015 Update $MMM

Conglomerates Stocks Leave a Comment on 3M Company Analysis – September 2015 Update $MMM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how 3M Company (MMM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): 3M Company is a diversified technology company. The Company operates in five business segments: Industrial, which serves a range of markets, such as automotive original equipment manufacturer (OEM) and automotive aftermarket, electronics, appliance, paper and printing, packaging, food and beverage, and construction; Safety and Graphics, which serves a range of markets for the safety, security and productivity of people, facilities and systems; Electronics and Energy, which serves customers in electronics and energy markets, including solutions for electronic devices, telecommunications networks, electrical products, power generation and distribution, and infrastructure protection; Health Care, which serves markets that include medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, and health information systems, and Consumer, which serves markets that include consumer retail, office retail, home improvement, building maintenance and other markets.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of MMM – September 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end Pass
6. Moderate PEmg Ratio PEmg < 20 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

MMM value Chart September 2015

EPSmg $7.12
MG Growth Estimate 4.72%
MG Value $127.73
Opinion Fairly Valued
MG Value based on 3% Growth $103.26
MG Value based on 0% Growth $60.53
Market Implied Growth Rate 5.61%
Current Price $140.47
% of Intrinsic Value 109.97%

3M Company qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor’s only initial concern is the high PB ratio while the Enterprising Investor has no concerns.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $5.42 in 2011 to an estimated $7.12 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 5.61% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on 3M Company (MMM)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

MMM Charts September 2015

Net Current Asset Value (NCAV) -$7.56
Graham Number $59.95
PEmg 19.74
Current Ratio 2.64
PB Ratio 6.90
Dividend Yield 2.67%
Number of Consecutive Years of Dividend Growth 20

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $13,431,000,000
Total Current Liabilities $5,095,000,000
Long-Term Debt $8,431,000,000
Total Assets $31,388,000,000
Intangible Assets $8,340,000,000
Total Liabilities $18,295,000,000
Shares Outstanding (Diluted Average) 643,000,000

Earnings Per Share History

Next Fiscal Year Estimate $7.62
Dec14 $7.49
Dec13 $6.72
Dec12 $6.32
Dec11 $5.96
Dec10 $5.63
Dec09 $4.52
Dec08 $4.89
Dec07 $5.60
Dec06 $5.06
Dec05 $4.12
Dec04 $3.75
Dec03 $3.02
Dec02 $2.50
Dec01 $1.79
Dec00 $2.23
Dec99 $2.17
Dec98 $1.44
Dec97 $2.53
Dec96 $1.83
Dec95 $1.16

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $7.12
Dec14 $6.72
Dec13 $6.17
Dec12 $5.75
Dec11 $5.42
Dec10 $5.14
Dec09 $4.88
Dec08 $4.93
Dec07 $4.74
Dec06 $4.10
Dec05 $3.43
Dec04 $2.94
Dec03 $2.47
Dec02 $2.14
Dec01 $1.98
Dec00 $2.07
Dec99 $1.93

Recommended Reading:

Other ModernGraham posts about the company

21 Companies in the Spotlight This Week – 5/9/15
3M Company Quarterly Valuation – May 2015 $MMM
34 Companies in the Spotlight This Week – 2/7/15
3M Company Quarterly Valuation – February 2015 $MMM
27 Companies in the Spotlight This Week – 11/8/14

Other ModernGraham posts about related companies

Honeywell International Inc. Analysis – July 2015 Update $HON
Raven Industries Inc. Analysis – Initial Coverage $RAVN
Illinois Tool Works Analysis – July 2015 Update $ITW
3M Company Quarterly Valuation – May 2015 $MMM
Honeywell International Inc. Quarterly Valuation – May 2015 $HON
Illinois Tool Works Inc. Quarterly Valuation – March 2015 $ITW
General Electric Annual Valuation – 2015 $GE
3M Company Quarterly Valuation – February 2015 $MMM
Honeywell International Inc. Quarterly Valuation – January 2015 $HON
Illinois Tool Works Quarterly Valuation – December 2014 $ITW

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

3M Company Quarterly Valuation – May 2015 $MMM

Conglomerates Stocks Leave a Comment on 3M Company Quarterly Valuation – May 2015 $MMM

200px-3M_wordmark.svg3M Company (NYSE:MMM) may initially attract many value investors, due to the earnings growth in recent years, along with the popularity of its products. However, Benjamin Graham, the father of value investing, taught that we must remove speculation from investment decisions, as the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits. Here is an updated look at how the company fares in the ModernGraham valuation model.

The model is inspired by the teachings of Benjamin Graham, and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor, or the less conservative Enterprising Investor who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation, in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using theModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

MMM Chart

MMM data by YCharts

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Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – PASS
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – Has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – Earnings per share has increased by at least one-third over the last 10 years, using three-year averages at the beginning and end of the period – PASS
  6. Moderate PEmg (price over normalized earnings) ratio – PEmg is less than 20 – FAIL
  7. Moderate Price-to-Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – Must pass at least 4 of the following 5 tests, or be suitable for a Defensive Investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings Growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data

Recent Price $157.98
MG Value $131.77
MG Opinion Overvalued
Value Based on 3% Growth $104.27
Value Based on 0% Growth $61.13
Market Implied Growth Rate 6.73%
Net Current Asset Value (NCAV) -$6.43
PEmg 21.97
Current Ratio 2.46
PB Ratio 7.35

Balance Sheet – March 2015

Current Assets $12,518,000,000
Current Liabilities $5,082,000,000
Total Debt $6,459,000,000
Total Assets $30,643,000,000
Intangible Assets $8,330,000,000
Total Liabilities $16,691,000,000
Outstanding Shares 649,200,000

Earnings Per Share

2015 (estimate) $7.83
2014 $7.49
2013 $6.72
2012 $6.32
2011 $5.96
2010 $5.63
2009 $4.52
2008 $4.89
2007 $5.60
2006 $5.06
2005 $3.98

Earnings Per Share – ModernGraham

2015 (estimate) $7.19
2014 $6.72
2013 $6.17
2012 $5.75
2011 $5.42
2010 $5.14

Dividend History

MMM Dividend Chart

MMM Dividend data by YCharts

Conclusion

3M Company is suitable for the Enterprising Investor, but not for the more conservative Defensive Investor, who is concerned about the high PEmg and PB ratios. The Enterprising Investor, on the other hand, has no initial concerns. As a result, all Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $5.42 in 2011 to an estimated $7.19 for 2015. This level of demonstrated growth does not support the market’s implied estimate for earnings growth of 6.73% over the next 7-10 years. Therefore, the model returns an estimate of intrinsic value falling below the current price, indicating the company is overvalued at the present time.

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3M Company Quarterly Valuation – February 2015 $MMM

Conglomerates Stocks Leave a Comment on 3M Company Quarterly Valuation – February 2015 $MMM

200px-3M_wordmark.svg

3M Company is suitable for the Enterprising Investor, but not the more conservative Defensive Investor, who is concerned with the low current ratio, as well as the high PEmg and PB ratios. The Enterprising Investor, on the other hand, is only concerned by the level of debt relative to the net current assets. As a result, the Enterprising Investor should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $5.14 in 2010 to only $6.72 for 2014. This demonstrated growth does not support the market’s implied estimate of 8.01%. As a result, the ModernGraham valuation model returns an estimate of intrinsic value below the market price at this time, and the company appears to be overvalued by the market.

Be sure to check out previous ModernGraham valuations of 3M Company (MMM) for greater perspective!

Read the full valuation on Seeking Alpha!

MMM Chart

MMM data by YCharts

Disclaimer:  The author did not hold a position in 3M Company (MMM) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

3M Company Quarterly Valuation – November 2014 $MMM

Conglomerates Stocks Leave a Comment on 3M Company Quarterly Valuation – November 2014 $MMM

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3M Company is not a great opportunity for Defensive Investors, as the company has a low current ratio and high PEmg and PB ratios. However, the less conservative Enterprising Investor has no initial concerns and is willing to proceed to the next part of the analysis, which is a determination of the company’s intrinsic value.

When estimating the intrinsic value, it is critical to consider the company’s historical earnings results in combination with a review of the market’s implied estimate for further growth. In this case, the company has grown its EPSmg (normalized earnings) from $5.14 in 2010 to an estimated $6.71 for 2014. While this is a strong level of demonstrated growth, it does not quite support the market’s implied estimate for earnings growth of 6.96% over the next 7-10 years. In order to reach that growth rate, the company would need to achieve higher growth than it has in the recent past. The ModernGraham valuation model therefore returns an estimate of intrinsic value falling below the current price, indicating the company is overvalued at the present time.

Be sure to check out previous ModernGraham valuations of 3M Company for more perspective!

Read the full valuation on Seeking Alpha!

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