Analyzing 3M’s Returns Compared to Its Peers before 3Q17



3M to announce its 3Q17 earnings

In a press release, 3M (MMM) said that it would announce its 3Q17 earnings on October 24, 2017, before the market opens at 8:00 AM CDT. 3M’s management will hold a conference on the same day to discuss its earnings.

In this series, we’ll look at 3M’s stock returns so far in 2017. We’ll review analysts’ revenue and earnings estimates for 3Q17. We’ll also discuss analysts’ latest recommendations.

On a year-to-date basis, 3M has given good returns to its investors. 3M stock has returned 21.90% and outperformed the broad-based SPDR S&P 500 ETF (SPY), which has returned 14.30%. 3M has also outperformed its industrial peer General Electric (GE), which has returned -26.60%. However, Stanley Black & Decker (SWK) and Honeywell (HON) have outperformed 3M with returns of 36.60% and 23.8% during the same period.

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3M’s strong performance is primarily driven by two quarters of good earnings that beat analysts’ estimates. Also, 3M has continued to work towards consolidating its business portfolio from 40 to 25 to have better focus. In this regard, 3M has made several divestitures. At the same time, it acquired Scott Safety from Johnson Controls (JCI), which had annual revenue of $575 million. The deal was closed on October 4 and will have a positive impact in 4Q17. In 2Q17, 3M revised its earnings per share to $8.80–$9.05 for fiscal 2017—compared to the previous guidance of $8.70–$9.05. All of these positive developments have pushed the stock price up.

Moving averages and RSI

3M’s strong gain helped the stock trade largely above the 100-day moving averages throughout 2017. As of October 17, 3M was trading 4.25% above the 100-day moving average price, which indicates an upward trend in the stock. However, investors need to be cautious because 3M’s RSI (relative strength index) of 70 indicates that the stock has temporarily moved into an “overbought” situation. As a result, it could face some selling pressure.


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