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3M CO

New York Stock Exchange, Inc. / Industrials / Industrial Conglomerates

Fundamental Rating

5

We assign a fundamental rating of 5 out of 10 to MMM. MMM was compared to 10 industry peers in the Industrial Conglomerates industry. MMM has only an average score on both its financial health and profitability. MMM has a valuation in line with the averages, but it does not seem to be growing. Finally MMM also has an excellent dividend rating. With these ratings, MMM could be worth investigating further for dividend investing!.



6

1. Profitability

1.1 Basic Checks

MMM had positive earnings in the past year.
In the past year MMM had a positive cash flow from operations.
MMM had positive earnings in 4 of the past 5 years.
In the past 5 years MMM always reported a positive cash flow from operatings.

1.2 Ratios

MMM's Return On Assets of -13.83% is on the low side compared to the rest of the industry. MMM is outperformed by 60.00% of its industry peers.
MMM has a worse Return On Equity (-145.52%) than 60.00% of its industry peers.
MMM's Return On Invested Capital of 14.08% is amongst the best of the industry. MMM outperforms 100.00% of its industry peers.
MMM had an Average Return On Invested Capital over the past 3 years of 14.01%. This is significantly above the industry average of 7.86%.
The last Return On Invested Capital (14.08%) for MMM is above the 3 year average (14.01%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA -13.83%
ROE -145.52%
ROIC 14.08%
ROA(3y)3.73%
ROA(5y)6.56%
ROE(3y)-22.31%
ROE(5y)4.06%
ROIC(3y)14.01%
ROIC(5y)14.74%

1.3 Margins

The Operating Margin of MMM (17.66%) is better than 90.00% of its industry peers.
MMM's Operating Margin has declined in the last couple of years.
MMM's Gross Margin of 43.77% is amongst the best of the industry. MMM outperforms 100.00% of its industry peers.
MMM's Gross Margin has declined in the last couple of years.
Industry RankSector Rank
OM 17.66%
PM (TTM) N/A
GM 43.77%
OM growth 3Y-6.55%
OM growth 5Y-3.16%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-3.43%
GM growth 5Y-2.3%

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5

2. Health

2.1 Basic Checks

MMM has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for MMM has been increased compared to 1 year ago.
Compared to 5 years ago, MMM has less shares outstanding
MMM has a better debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 2.75 indicates that MMM is not a great score, but indicates only limited risk for bankruptcy at the moment.
MMM's Altman-Z score of 2.75 is amongst the best of the industry. MMM outperforms 90.00% of its industry peers.
MMM has a debt to FCF ratio of 3.17. This is a good value and a sign of high solvency as MMM would need 3.17 years to pay back of all of its debts.
MMM's Debt to FCF ratio of 3.17 is amongst the best of the industry. MMM outperforms 90.00% of its industry peers.
MMM has a Debt/Equity ratio of 3.10. This is a high value indicating a heavy dependency on external financing.
MMM has a worse Debt to Equity ratio (3.10) than 60.00% of its industry peers.
Industry RankSector Rank
Debt/Equity 3.1
Debt/FCF 3.17
Altman-Z 2.75
ROIC/WACC1.81
WACC7.77%

2.3 Liquidity

A Current Ratio of 1.07 indicates that MMM should not have too much problems paying its short term obligations.
MMM has a Current ratio (1.07) which is comparable to the rest of the industry.
MMM has a Quick Ratio of 1.07. This is a bad value and indicates that MMM is not financially healthy enough and could expect problems in meeting its short term obligations.
MMM's Quick ratio of 0.76 is in line compared to the rest of the industry. MMM outperforms 50.00% of its industry peers.
Industry RankSector Rank
Current Ratio 1.07
Quick Ratio 0.76

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3

3. Growth

3.1 Past

MMM shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -8.51%.
MMM shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -1.53% yearly.
MMM shows a decrease in Revenue. In the last year, the revenue decreased by -4.52%.
MMM shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -0.05% yearly.
EPS 1Y (TTM)-8.51%
EPS 3Y1.83%
EPS 5Y-1.53%
EPS growth Q2Q6.14%
Revenue 1Y (TTM)-4.52%
Revenue growth 3Y0.51%
Revenue growth 5Y-0.05%
Revenue growth Q2Q-0.82%

3.2 Future

MMM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.16% yearly.
Based on estimates for the next years, MMM will show a small growth in Revenue. The Revenue will grow by 5.44% on average per year.
EPS Next Y-16.2%
EPS Next 2Y-9.1%
EPS Next 3Y-4.67%
EPS Next 5Y6.16%
Revenue Next Year-18.65%
Revenue Next 2Y-11.92%
Revenue Next 3Y-7.08%
Revenue Next 5Y5.44%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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6

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 9.84 indicates a reasonable valuation of MMM.
MMM's Price/Earnings ratio is a bit cheaper when compared to the industry. MMM is cheaper than 70.00% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 24.83. MMM is valued rather cheaply when compared to this.
Based on the Price/Forward Earnings ratio of 11.75, the valuation of MMM can be described as reasonable.
MMM's Price/Forward Earnings ratio is rather cheap when compared to the industry. MMM is cheaper than 100.00% of the companies in the same industry.
MMM's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.32.
Industry RankSector Rank
PE 9.84
Fwd PE 11.75

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of MMM indicates a somewhat cheap valuation: MMM is cheaper than 70.00% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, MMM is valued cheaply inside the industry as 90.00% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 9.94
EV/EBITDA 7.54

4.3 Compensation for Growth

MMM has a very decent profitability rating, which may justify a higher PE ratio.
A cheap valuation may be justified as MMM's earnings are expected to decrease with -4.67% in the coming years.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y-9.1%
EPS Next 3Y-4.67%

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8

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 6.48%, MMM is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 6.76, MMM pays a better dividend. On top of this MMM pays more dividend than 90.00% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, MMM pays a better dividend.
Industry RankSector Rank
Dividend Yield 6.48%

5.2 History

The dividend of MMM has a limited annual growth rate of 1.98%.
MMM has been paying a dividend for at least 10 years, so it has a reliable track record.
MMM has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)1.98%
Div Incr Years19
Div Non Decr Years19

5.3 Sustainability

MMM has negative earnings and hence a negative payout ratio. The dividend may be in danger.
The dividend of MMM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP-47.33%
EPS Next 2Y-9.1%
EPS Next 3Y-4.67%

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