S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Why This Bear Market Is Not Even Close to Being Done…
Market Wizard Reveals: The One Ticker Retirement Plan (Ad)
Denmark says Nord Stream 1 natural gas pipeline has also stopped leaking
Denmark says Nord Stream 1 pipelines stop leaking
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Brazil holds historic election with Lula against Bolsonaro
US shift away from coal hits tribal community in New Mexico
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Tesla sales bounce back in Q3 but fall short of estimates
Allies aim for risky Russian oil price cap as winter nears
S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Why This Bear Market Is Not Even Close to Being Done…
Market Wizard Reveals: The One Ticker Retirement Plan (Ad)
Denmark says Nord Stream 1 natural gas pipeline has also stopped leaking
Denmark says Nord Stream 1 pipelines stop leaking
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Brazil holds historic election with Lula against Bolsonaro
US shift away from coal hits tribal community in New Mexico
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Tesla sales bounce back in Q3 but fall short of estimates
Allies aim for risky Russian oil price cap as winter nears
S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Why This Bear Market Is Not Even Close to Being Done…
Market Wizard Reveals: The One Ticker Retirement Plan (Ad)
Denmark says Nord Stream 1 natural gas pipeline has also stopped leaking
Denmark says Nord Stream 1 pipelines stop leaking
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Brazil holds historic election with Lula against Bolsonaro
US shift away from coal hits tribal community in New Mexico
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Tesla sales bounce back in Q3 but fall short of estimates
Allies aim for risky Russian oil price cap as winter nears
S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Why This Bear Market Is Not Even Close to Being Done…
Market Wizard Reveals: The One Ticker Retirement Plan (Ad)
Denmark says Nord Stream 1 natural gas pipeline has also stopped leaking
Denmark says Nord Stream 1 pipelines stop leaking
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Brazil holds historic election with Lula against Bolsonaro
US shift away from coal hits tribal community in New Mexico
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Tesla sales bounce back in Q3 but fall short of estimates
Allies aim for risky Russian oil price cap as winter nears

Has 3M Reached the Point of Being so Bad It’s Good?

Has 3M Reached the Point of Being so Bad It’s Good?

If you’re an investor in 3M (NYSE:MMM) you’re aware of the perfect storm that’s swirling around the company and its stock. The company got a lift from being a supplier of essential materials for first responders during the pandemic. 

That halo is long since gone. The company now faces litigation on several fronts, with the largest having to do with allegations that earplugs sold by 3M caused hearing damage for over 230,000 veterans. The case is ongoing and likely could take years to resolve.  

The markets hate uncertainty. And with a worst-case scenario of over $230 billion in damages hanging over the company, that’s some major uncertainty.  

Plus, the company has delivered lighter year-over-year revenue and earnings in the past two quarters. Some analysts believe that trend will only get worse as the economy continues to slow.  

In this article, I’ll give you some perspective from thoughts that have been rolling around in my head as I try to make sense of MMM stock.  

A Case of Mistaken Identity? 

Putting aside the lawsuits, the bearish cases I read about 3M center around the lack of growth. And there’s no denying that revenue has been stagnant for the last several years. But that’s an expectation when you buy a stock like MMM.  

What you don’t expect is what happened to the stock over the past ten years. At the end of 2012, MMM stock was trading under $100. Over the next six years, it soared to over $250, but revenue growth wouldn’t suggest such growth would have been possible. In fact, at one point, the stock had a price-to-earnings ratio of around 28x earnings. That was nearly double its historical average of approximately 18x earnings. 


Simply put, if you were buying MMM stock at $250 a share, you were buying it when it was priced to perfection. So I can understand that if you look at 3M as a growth stock, you’ll be disappointed.  

But it’s not a growth stock. And that means the current P/E ratio of around 16x earnings argues for the stock being undervalued. 

What About the Dividend? 

Of course, what makes MMM stock attractive to income investors is its dividend. 3M is a dividend king that has increased its dividend in each of the last 64 consecutive years. Nothing about the current situation leads me to believe that it won’t continue.  

But my certainty changes once we learn what the company’s ultimate responsibility will be in the ongoing litigation. If the company becomes responsible for $230 billion in liabilities, the dividend will almost certainly have to be cut.  

The Bears are Winning the Day 

Historically, short interest on MMM stock has been around $1.5 billion. Today, it’s around $13 billion, and the stock has a short interest ratio of around 18%. That’s reflected in the stock price, which is down nearly 20% in the 30 days ending September 13, 2022. 

That’s tough math that just layers more uncertainty into the stock. I hate uncertainty in my fantasy football lineup, and I don’t have any money riding on that. In the short term, that's enough to stop me from taking a new position in MMM stock. There's no reason to guess where the stock might bottom.

But what if you're a current investor? That brings up a different question...

Is All the Bad News Priced into MMM Stock? 

That’s the question long-term investors must ask. Right now, analysts are expecting a steep drop in earnings to justify the current stock price. And analysts have been lowering their price targets since the company’s last earnings report.  

It’s worth noting, however, that all of those price targets are higher than the stock’s price as of September 14, 2022. And of the analysts tracked by MarketBeat, the stock has a consensus price target of $147.43 as of September 14, 2022.  

That being said, 3M is taking proactive steps to streamline the company (I.e., cutting jobs, etc.). This is normal for companies that are forecasting a recession. And I would imagine any gains to the dividend will be modest as the company looks to bolster its cash reserves due to ongoing litigation.  

So could the news get worse for 3M? Sure, but what’s worse for investors right now is the uncertainty, and 3M is supplying bucket loads full of it. But for now, they’re also providing an appealing dividend for current investors. Whether those investors could, perhaps, replicate that with other stocks or by buying an ETF is a topic for another day. 

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
3M (MMM)
3.0391 of 5 stars
$110.50-1.6%5.39%15.43Hold$147.43
Compare These Stocks  Add These Stocks to My Watchlist 

Should you invest $1,000 in 3M right now?

Before you consider 3M, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and 3M wasn't on the list.

While 3M currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Chris Markoch

About Chris Markoch

Contributing Author: Retirement, Individual Investing

Chris Markoch is a freelance financial copywriter with over five years of experience covering various aspects of the financial markets. You may find his writing a little different than other stock articles you’ve read. And that’s OK with him. Chris doesn’t have a traditional finance background. What he does bring to the table is a strong business and marketing background having worked for agencies that serviced Fortune 500 companies. With that in mind, he isn’t overly impressed with what companies say, and more focused on what they do. And because buyer behavior dictates so much of what happens with a stock, Chris always keeps the end consumer close in mind. Chris has been writing for MarketBeat since 2018.

Contact Chris Markoch via email at CTMarkoch@msn.com.
Free Email Newsletter

Complete the form below to receive the latest headlines and analysts' recommendations for your stocks with our free daily email newsletter:

Most Read This Week

Recent Articles

Search Headlines:

Latest PodcastFed Raises Rates: 3 Stocks to Watch Newmont Mining, Walmart, AMC

Axel Merk, President and CIO of Merk Investments has three very different stocks he frames within the current market and economic conditions.

MarketBeat Resources

Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau MarketBeat is rated as Great on TrustPilot

© American Consumer News, LLC dba MarketBeat® 2010-2022. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | contact@marketbeat.com | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Privacy Policy | Do Not Sell My Information | RSS Feeds

© 2022 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart's disclaimer.