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3M CO

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

Fundamental Rating

4

Overall MMM gets a fundamental rating of 4 out of 10. We evaluated MMM against 10 industry peers in the Industrial Conglomerates industry. Both the profitability and the financial health of MMM get a neutral evaluation. Nothing too spectacular is happening here. MMM has a valuation in line with the averages, but on the other hand it scores bad on growth. Finally MMM also has an excellent dividend rating. With these ratings, MMM could be worth investigating further for dividend investing!.



5

1. Profitability

1.1 Basic Checks

In the past year MMM was profitable.
MMM had a positive operating cash flow in the past year.
MMM had positive earnings in 4 of the past 5 years.
Each year in the past 5 years MMM had a positive operating cash flow.

1.2 Ratios

With a Return On Assets value of -12.75%, MMM is not doing good in the industry: 60.00% of the companies in the same industry are doing better.
Looking at the Return On Equity, with a value of -144.74%, MMM is doing worse than 60.00% of the companies in the same industry.
With an excellent Return On Invested Capital value of 13.07%, MMM belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
MMM had an Average Return On Invested Capital over the past 3 years of 14.01%. This is significantly above the industry average of 7.55%.
Industry RankSector Rank
ROA -12.75%
ROE -144.74%
ROIC 13.07%
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

MMM has a Operating Margin of 18.64%. This is amongst the best in the industry. MMM outperforms 90.00% of its industry peers.
MMM's Operating Margin has declined in the last couple of years.
MMM's Gross Margin of 44.55% is amongst the best of the industry. MMM outperforms 100.00% of its industry peers.
In the last couple of years the Gross Margin of MMM has declined.
Industry RankSector Rank
OM 18.64%
PM (TTM) N/A
GM 44.55%
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

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so MMM is creating value.
The number of shares outstanding for MMM has been increased compared to 1 year ago.
The number of shares outstanding for MMM has been reduced compared to 5 years ago.
Compared to 1 year ago, MMM has an improved debt to assets ratio.

2.2 Solvency

MMM has an Altman-Z score of 2.76. This is not the best score and indicates that MMM is in the grey zone with still only limited risk for bankruptcy at the moment.
MMM's Altman-Z score of 2.76 is amongst the best of the industry. MMM outperforms 90.00% of its industry peers.
MMM has a debt to FCF ratio of 4.60. This is a neutral value as MMM would need 4.60 years to pay back of all of its debts.
MMM has a Debt to FCF ratio of 4.60. This is in the better half of the industry: MMM outperforms 70.00% of its industry peers.
MMM has a Debt/Equity ratio of 4.23. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 4.23, MMM is not doing good in the industry: 60.00% of the companies in the same industry are doing better.
Industry RankSector Rank
Debt/Equity 4.23
Debt/FCF 4.6
Altman-Z 2.76
ROIC/WACC1.69
WACC7.72%

2.3 Liquidity

A Current Ratio of 1.64 indicates that MMM should not have too much problems paying its short term obligations.
The Current ratio of MMM (1.64) is better than 80.00% of its industry peers.
A Quick Ratio of 1.27 indicates that MMM should not have too much problems paying its short term obligations.
MMM's Quick ratio of 1.27 is fine compared to the rest of the industry. MMM outperforms 80.00% of its industry peers.
Industry RankSector Rank
Current Ratio 1.64
Quick Ratio 1.27

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1

3. Growth

3.1 Past

The Earnings Per Share has been growing slightly by 2.55% over the past year.
MMM shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -1.53% yearly.
The Revenue has decreased by -2.33% in the past year.
Measured over the past years, MMM shows a decrease in Revenue. The Revenue has been decreasing by -0.05% on average per year.
EPS 1Y (TTM)2.55%
EPS 3Y1.83%
EPS 5Y-1.53%
EPS growth Q2Q21.32%
Revenue 1Y (TTM)-2.33%
Revenue growth 3Y0.51%
Revenue growth 5Y-0.05%
Revenue growth Q2Q-0.35%

3.2 Future

The Earnings Per Share is expected to grow by 1.39% on average over the next years.
MMM is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -2.16% yearly.
EPS Next Y-16.2%
EPS Next 2Y-9.1%
EPS Next 3Y-4.67%
EPS Next 5Y1.39%
Revenue Next Year-18.65%
Revenue Next 2Y-11.92%
Revenue Next 3Y-7.08%
Revenue Next 5Y-2.16%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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6

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 10.48, which indicates a very decent valuation of MMM.
Compared to the rest of the industry, the Price/Earnings ratio of MMM indicates a somewhat cheap valuation: MMM is cheaper than 70.00% of the companies listed in the same industry.
MMM is valuated cheaply when we compare the Price/Earnings ratio to 28.91, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 13.26, MMM is valued correctly.
Based on the Price/Forward Earnings ratio, MMM is valued cheaper than 100.00% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of MMM to the average of the S&P500 Index (20.51), we can say MMM is valued slightly cheaper.
Industry RankSector Rank
PE 10.48
Fwd PE 13.26

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.
90.00% of the companies in the same industry are more expensive than MMM, based on the Price/Free Cash Flow ratio.
Industry RankSector Rank
P/FCF 12.03
EV/EBITDA 8.26

4.3 Compensation for Growth

MMM's earnings are expected to decrease with -4.67% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y-9.1%
EPS Next 3Y-4.67%

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7

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 6.21%, MMM is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 5.56, 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 2.34, MMM pays a better dividend.
Industry RankSector Rank
Dividend Yield 6.21%

5.2 History

The dividend of MMM has a limited annual growth rate of 1.98%.
MMM has paid a dividend for at least 10 years, which is 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.
MMM's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP-47.12%
EPS Next 2Y-9.1%
EPS Next 3Y-4.67%

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