Assessing 3M (MMM) Valuation After Recent Flat Trading And Ongoing Efficiency Narrative

3M (MMM) is back on many watchlists after recent trading left the stock roughly flat over the past week and slightly lower over the past month. This performance is inviting a closer look at its fundamentals.

See our latest analysis for 3M.

At a share price of $161.82, 3M’s recent 1-day share price return of 1.07% and 90-day share price return of 4.18% sit alongside a 1-year total shareholder return of 26.54%. This indicates that recent momentum is occurring in the context of a stronger longer term recovery.

If 3M has you reviewing industrial names, it can be useful to see how other sectors are shaping up too. This includes fast growing stocks with high insider ownership as a way to spot fresh ideas backed by committed insiders.

With 3M trading at $161.82, sitting at an estimated 17% discount to one intrinsic value estimate and modestly below a US$174.25 analyst target, is this old industrial name mispriced, or is the market already baking in future growth?

Most Popular Narrative: 7.1% Undervalued

With 3M last closing at $161.82 against a most-followed fair value of $174.25, the narrative sees upside that leans heavily on its operating playbook.

Significant operational efficiency gains, such as improved on-time delivery, increased equipment effectiveness, quality cost reductions, and supply chain/process consolidation, are driving structurally higher operating margins and earnings-benefits expected to compound as further optimization and automation are rolled out company-wide.

Read the complete narrative.

Curious what kind of margin profile this assumes, and how that ties into projected earnings and valuation multiples over time? The narrative leans on specific revenue growth, profitability targets and a defined discount rate to justify its fair value, plus an earnings multiple that stands well above the wider Industrials group.

Result: Fair Value of $174.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this hinges on PFAS litigation staying manageable and portfolio reshaping going to plan, because large legal costs or disrupted asset sales could quickly change the story.

Find out about the key risks to this 3M narrative.

Build Your Own 3M Narrative

If you are not fully on board with this storyline or would rather rely on your own research, you can create a custom view in just a few minutes by starting with Do it your way.

A great starting point for your 3M research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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