What’s Next For 3M Stock After A 15% Fall This Year?
3M reported its Q4’23 results last month, with revenues and earnings beating the street estimates. The company reported revenue of $8.0 billion and earnings of $2.42 on a per-share and adjusted basis, compared to the consensus estimates of $7.7 billion and $2.31, respectively. While MMM stock has been under pressure in recent quarters amid declining sales and litigation, we think it has ample room for growth from its current levels of around $90.
Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could MMM face a similar situation as it did in 2021, 2022, and 2023 and underperform the S&P over the next 12 months – or will it see a recovery? From a valuation perspective, we believe MMM stock has ample room for growth. We estimate 3M’s Valuation to be $111 per share, reflecting a 20% upside from its current level of around $90.
However, we think some of these concerns have already been priced in, with its stock trading at less than 10x forward earnings compared to the 12x average over the last two years. The average P/E multiple over the last five years is even higher at around 16x. A decline in the valuation multiple for 3M makes sense, given the ongoing issues with the company, but we think investors can use the current dip to enter 3M stock for robust gains in the long run.