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Analysts Expect 3M’s Revenues to Fall in Q4

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Jan. 28 2019, Updated 11:15 a.m. ET

3M’s fourth-quarter revenue expectations

3M (MMM), a diversified technology company, is expected to report revenues of $7.87 billion in the fourth quarter—a decrease of 1.5% YoY (year-over-year). In the fourth quarter of 2017, 3M reported revenues of ~$7.99 billion. 3M’s fourth-quarter revenues have remained range-bound between $7.30 billion and $7.99 billion in the past five years. The company is struggling to go beyond $8 billion.

 

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Why 3M is expected post lower revenues?

In the third quarter of 2018, among 3M’s five reporting segments, three reported lower revenues, one reported flat revenues, and one reported higher revenues. A similar trend is expected to continue in the fourth quarter. The lower revenues were mainly driven by the stronger dollar. The trend is expected to continue in the fourth quarter. The US Dollar Index, which measures the performance of the dollar against the basket of currencies, has declined 1.8% in the past six months. 3M’s product price increase might not be a big influencing factor to improve its revenues.

On the other side, 3M’s new product launches and the new business contract wins are positive and could increase 3M’s fourth-quarter revenues.

Investors could hold 3M indirectly by investing in the SPDR Dow Jones Industrial Average ETF (DIA), which has invested 5.4% of its portfolio in 3M. DIA also provides exposure to Boeing (BA), Goldman Sachs (GS), and Apple (AAPL) with weights of 10.0%, 5.5%, and 4.3%, respectively, as of January 25.

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