Shareholders might have noticed that 3M Company (NYSE:MMM) filed its third-quarter result this time last week. The early response was not positive, with shares down 6.3% to US$159 in the past week. The result was positive overall - although revenues of US$8.4b were in line with what the analysts predicted, 3M surprised by delivering a statutory profit of US$2.43 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for 3M from 14 analysts is for revenues of US$33.7b in 2021 which, if met, would be a credible 7.4% increase on its sales over the past 12 months. Statutory earnings per share are predicted to rise 4.9% to US$9.34. Before this earnings report, the analysts had been forecasting revenues of US$33.5b and earnings per share (EPS) of US$9.18 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$177, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values 3M at US$227 per share, while the most bearish prices it at US$145. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting 3M's growth to accelerate, with the forecast 7.4% growth ranking favourably alongside historical growth of 1.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.3% next year. 3M is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on 3M. Long-term earnings power is much more important than next year's profits. We have forecasts for 3M going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - 3M has 1 warning sign we think you should be aware of.
This article by Simply Wall St is general in nature. 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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